Gold Struggles Below $2,000 as Doubts Grow Over Fed Rate Cut Timing

Credit: Reuters

Gold prices remained near a two-month low on Wednesday, trading below the crucial $2,000-per-ounce level, following a stronger-than-expected U.S. inflation report.

Spot gold was steady at $1,992.21 per ounce after experiencing its largest daily decline since December 4 on Tuesday. U.S. gold futures edged slightly lower.

The inflation data, which showed consumer prices rising more than anticipated in January, led traders to adjust their expectations regarding the timing and extent of Federal Reserve rate cuts. Analysts suggest that the next significant support level for gold is around $1,975 per ounce, coinciding with the December Federal Open Market Committee meeting where three-quarter point rate cuts were announced, sparking a gold rally.

Traders have revised their projections from four quarter-point rate cuts for 2024 to align with the Fed's "dot plot" released in December, indicating that the Fed may delay interest rate cuts until June.