The strengthening U.S. dollar has extended gold prices’ losses on Wednesday. As of 4:15 GMT, gold was trading at $2,023.49 per ounce, down by 0.2 percent. This follows an earlier 1.3 percent decline in the previous session. The previous session saw the gold market record its largest single-day fall since December 4 last year.
The prices of other metals have also dropped. Spot silver dipped by 0.4 percent to hit $22.81 per ounce. Meanwhile, platinum slid to $892.37, reflecting a 0.3 percent decrease. Additionally, palladium hit $934.44, which is equivalent to a 0.2 percent decrease.
Dampened expectations
According to a Reuters report, this movement of gold prices comes after a Federal Reserve (Fed) official made comments that dampened the market’s speculations about a March interest rate cut. Market participants have also expected that the Fed might slash the rate by up to 1.5 percentage points by the end of 2024.
In a statement by Fed Governor Christopher Waller, the U.S. is close to achieving the inflation target of 2 percent. However, he emphasized that the Fed should only cut its benchmark interest rate once it is confident that the decrease in inflation is stable.
Waller, who spoke at an online event hosted by the Brookings Institution, underscored practicing a cautious approach to avoid premature action that might need to be reversed later on.
“The key thing is the economy is doing well. It is giving us the flexibility to move carefully and methodically. We can see how the data comes in, see if progress is being sustained,” remarked Waller.
“The worst thing we’d have is it all reverses after we’ve already started to cut. We really want to see evidence that this progress…in the real data and the inflation data continues. I believe it will,” he added.
Read: Oil prices slide amidst dollar surge and Middle East tensions
More comprehensive approach
Waller’s cautious stance on reducing interest rates further reflects a broader discussion among Fed policymakers about the right speed for such cuts.
His comments also indicate a shift in focus. While controlling inflation remains essential, there is now an increased emphasis on balancing various risks to maintain the Fed’s goal of maximum employment. This suggests a more comprehensive approach to economic policy, considering multiple factors rather than focusing solely on inflation.
The Fed’s next meeting is scheduled on January 30-31.
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