Gold Hits Record High Following Fed Chief's Comments On Interest Rate Cut

Gold fell more than 2% after hitting an all-time high on Monday as the dollar rebounded, but expectations of a cut in U.S. interest rates in 2024 stemmed zero-yield bullion's retreat.

Spot gold slipped 2.3% to $2,022.99 per ounce by 10:52 a.m. ET (1552 GMT). U.S. gold futures also fell 2.3% to $2,041.50.

Earlier in the Asian session, gold hit a record high of $2,135.4 on growing confidence about a rate cut following Fed Chair Jerome Powell's comments on Friday.

"Despite the fact that we are closer to a Federal Reserve pivot, it may be premature to see these prices being sustained... this market is getting a little tired," said Bart Melek, head of commodity strategies at TD Securities.

"We're going to need more catalysts, and they will come in the form of weak economic data."

Pressuring gold, the dollar index rose 0.5%, making bullion more expensive for other currency holders. U.S. 10-year Treasury yields also ticked higher. [USD/]

Traders are now pricing in a 58% chance for a rate cut by March, CME's FedWatch Tool showed. Lower rates reduce the opportunity cost of holding bullion.

Data last week pointed out to cooling inflationary pressures and a gradually easing labour market reinforcing the notion of an early rate cut.

"With the heightened uncertainty of the economy, U.S. investors are likely to shift their focus towards state of financial markets with higher Treasury yields and stretched equity valuations, which could trigger change in risk sentiment and benefit gold," said Ryan McIntyre, senior portfolio manager at Sprott Asset Management. [CFTC/]

Traders are awaiting Friday's release of U.S. non-farm payrolls data, which could help further gauge the interest rate outlook.

Silver slipped 3.7% to $24.48 per ounce, palladium fell 3% to $969.87, and platinum dipped 2.2% to $913.55.

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