Gold Falls as Fed Rate Cut Hopes Fade
Gold prices weakened slightly in early trading on Wednesday (February 25th), extending the decline from the previous session. This decline was triggered by declining expectations that the Federal Reserve would soon cut interest rates, thus reducing gold's appeal as a non-yielding asset.
Bullion was trading around US$5,130 per ounce, after falling 1.6% on Tuesday, ending a four-day rally. Federal Reserve Bank of Boston President Susan Collins stated that interest rates are likely to remain unchanged "for some time," as recent economic data shows the US labor market is strengthening again.
Pressure also comes from signals of a still-cautious Fed policy stance. The minutes of the Fed's January policy meeting, released earlier this month, showed central bank officials remaining cautious about further easing. In high interest rates, gold generally faces obstacles because it does not provide an interest-yield imbalance, making it less competitive than interest-bearing instruments.
At 7:27 a.m. Singapore time, gold prices fell 0.3% to US$5,131.00 per ounce. Silver weakened 0.4% to US$86.80, while platinum and palladium also fell. On the currency side, the Bloomberg spot dollar index ended the previous session with a slight gain, which also added pressure on precious metals. (alg)
Source: Newsmaker.id
