Gold futures slumped to kick off the final trading week of February, with the futures market continuing to push back expectations of the Federal Reserve’s first pivot in the current tightening cycle. Investors will also brace for two key reports this week: GDP and inflation.
March gold futures fell $11.80, or 0.58%, to $2,037.90 per ounce at 13:58 GMT on Monday on the COMEX division of the New York Mercantile Exchange. Gold prices are coming off a weekly gain of around 1% and are down 1.4% year-to-date.
Silver, the sister commodity to gold, slipped below $23. March silver futures declined $0.377, or 1.64%, to $22.605 per ounce. The white metal plunged 3.7% last week, adding to its year-to-date loss of nearly 6%.
The metals market slumped at the start of the trading week on expectations that monetary authorities will further delay rate cuts.
A chorus of Fed policymakers has signaled that the Federal Open Market Committee (FOMC) could continue to be patient and keep rates higher for longer.
According to the CME FedWatch Tool, investors are penciling in a 52% chance of a rate cut in June. This is in stark contrast to previous expectations of a rate reduction as early as March.
As a result, this lifted US Treasury yields, with the benchmark ten-year at 4.27%. The two-year yield picked up two basis points to 4.71%, while the 30-year bond was flat at 4.38%.
Gold is sensitive to fluctuations in interest rates because it can influence the opportunity cost of holding non-yielding bullion.
In the meantime, investors will be monitoring two crucial data points this week. The first will be the second fourth-quarter GDP estimate. It is still expected to show a 3.3% print. The second will be the personal consumption expenditure (PCE) price index is forecast to rise 0.3% and core PCE, which strips the volatile energy and food components, is predicted to climb 0.4%.
A weaker greenback failed to help the precious metal. The US Dollar Index (DXY), a gauge of the buck against a basket of currencies, shed 0.1% to 103.84, from an opening of 103.94. The DXY dropped 0.5% last week, but it is still up 2.5% year-to-date.
Typically, a lower buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.
In other metal markets, March copper futures declined $0.052, or 1.34%, to $3.828 per pound. March platinum futures dropped $24.70, or 2.72%, to $884.90 an ounce. March palladium futures plunged $29.20, or 2.93%, to $968.00 per ounce.