Gold prices sink as hawkish Fed comments dash rate cut hopes

Gold extended declines on Wednesday, hitting a near one-week low below $2,024 per ounce, pressured by a stronger dollar after hawkish comments from Federal Reserve Governor Christopher Waller. His remarks stating the Fed should not rush to cut rates triggered a sell-off in gold, stocks and bonds.

Spot gold fell 1.3% on Tuesday in its biggest single-day drop since December 4th. Markets had been betting on a Fed rate cut by March, but are now recalibrating those expectations. The odds of a cut next month fell from 73% to 63%, according to CME’s FedWatch tool.

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The dollar hovered at a one-month high following Waller’s comments. A stronger greenback coupled with rising Treasury yields makes gold less appealing. Tuesday saw the biggest one-day jump in yields in over three months.

The sell-off shows markets scaling back hopes of an imminent policy pivot by the Fed, dashing gold bugs’ rate cut dreams.