On Monday, the price of gold fell. It reached around $2,030 per ounce. This decrease continued from the last trading session. Strong economic data from the US caused the fall. Also, the Federal Reserve sent messages that seemed more aggressive. These messages and the data made people think interest rates would not decrease much.
A report came out last Friday. It showed impressive job growth in the US. In January, companies added 353,000 jobs. This number was a big increase from December’s figures. In December, after making some adjustments, the total was 333,000 jobs. The job growth in January was much higher than what most people had predicted. Analysts had expected an increase of only 180,000 jobs.
Jerome Powell, who leads the Federal Reserve, talked about interest rates. He gave this interview for the “60 Minutes” show, and people watched it on Sunday. He said the Federal Reserve would be very careful with any reductions in interest rates this year. He mentioned that the Federal Reserve wants to see clear proof. They want to be sure that inflation is consistently dropping towards their target of 2%.
Powell also said that the Federal Reserve might reduce rates slower than many people in the financial markets anticipate.
After hearing these comments and seeing the recent data, traders became less confident about a reduction in interest rates in March. Their confidence level fell to just 20%. They also adjusted their expectations for how much rates might decrease this year. Now, they think the total decrease might be around 137 basis points. This expectation is a bit less than what they thought at the end of the previous year, which was 150 basis points.