Gold is heading for its worst performance in six weeks

Gold prices are experiencing a global decline in current trading moments on Monday. Traders are eagerly awaiting the release of the Federal Reserve’s preferred inflation measure later this week, a factor that could impact the central bank’s decisions on interest rates and market expectations for the upcoming weeks.

Last week, Federal Reserve officials expressed the need for more inflation data before making any decisions regarding interest rate cuts. These statements followed positive indicators such as improved consumer sentiment in the United States, a robust labor market, and strong retail sales data, all suggesting a resilient economy.

The US interest tracking tool on the Investing Saudi website indicates a 99% market expectation that the Federal Reserve will maintain interest rates during the current January meeting. Expectations for a 25-basis-point reduction in borrowing costs during the March meeting have decreased from 71% two weeks ago to 49%.

Fitch anticipates a more gradual pace of interest rate cuts than what the financial markets expect. The rating agency does not foresee Federal Reserve cuts before June or July 2024, citing stable wage inflation and service prices.

The US dollar index declined, and yields on the 10-year US Treasury bond retreated from their highest level in over a month to 4.1111%. Inflation expectations for the next year, according to University of Michigan data, fell to 2.9% in January from 3.1% in December, reaching the lowest level since December 2020.

Investors are looking forward to the US PMI report on Wednesday, fourth-quarter GDP estimates on Thursday, and personal consumption expenditures data on Friday.

Gold futures prices increased at settlement on Friday, rising by 0.4% to $2,029.3 per ounce. However, for the week, gold ended with a 1.1% loss. Spot gold contracts are currently down 0.3% to $2,023 per ounce, while gold futures fell about 0.4% to $2,021 per ounce.

The dollar index saw a slight decline of about 0.05% to 103.020 points. In other precious metals, silver fell 0.2% to $22.55 per ounce, platinum settled at $898.95, and palladium declined 0.1% to $945.88.