Gold Extends Drop After Fed Officials Express Inflation Concern
Gold fell for a second day as comments from Federal Reserve officials over the weekend reinforced the view the US central bank will take a more cautious approach to cutting rates in 2025.
Bullion traded near $2,630 an ounce after San Francisco Fed President Mary Daly and Fed Governor Adriana Kugler emphasized the need to finish off the fight against inflation and reach the authority’s 2% target. Lower rates tend to benefit gold, as it doesn’t pay interest.
The Fed last month reined in the number of rate cuts it expects to make this year, as Chair Jerome Powell signaled greater caution over how quickly policymakers can continue reducing borrowing costs. That may be a headwind for the precious metal after it surged 27% last year in a record-breaking run that was propelled in part by US monetary easing.
Goldman Sachs Group Inc. said in a note that it no longer sees bullion reaching $3,000 an ounce by the end of the year, pushing the forecast to mid-2026 on fewer Fed cuts.
Spot gold dropped 0.5% to $2,627.60 an ounce as of 7:56 a.m. in London, after falling 0.7% on Friday. The Bloomberg Dollar Spot Index dipped 0.1%. Silver was flat, while palladium and platinum slipped.
A raft of data this week including non farm payrolls and job openings will be closely watched for a steer on the Fed’s easing trajectory as Donald Trump prepares to return to the White House this month. Minutes of the authority’s December meeting are also due this week.
Source: Bloomberg
