On Wednesday, gold prices fell to about $2,020 per ounce. This was a continuation of the drop that started the previous day. The decrease happened because the dollar became stronger and Treasury yields went up. These changes were the result of comments from a US Federal Reserve official. This official hinted that there might not be a cut in interest rates in March.
The story began on Tuesday. Christopher Waller, who is a Governor at the Federal Reserve, spoke on this topic. He suggested that the Federal Reserve might not reduce interest rates as much as many people had expected. He said that even though inflation is nearing the 2% target, the Federal Reserve should be patient. They should wait to ease policies until they are certain that inflation has consistently gone down.
Waller’s comments were similar to those made by officials at the European Central Bank earlier in the week. Both the US and European officials’ remarks made people change their thoughts about the likelihood of interest rate cuts.
The market’s view on the possibility of an interest rate cut by the Federal Reserve in March has shifted significantly. The CME Group’s FedWatch Tool shows that now, people think there’s a 62.2% chance of a rate cut in March. This is a large drop from 76.9%, which was the belief just the day before.
Investors are now looking for more clues about what might happen next. They are waiting for new data on US retail sales and more comments from the Federal Reserve this week. This upcoming information will help them understand the future direction of interest rates.