Gold prices slip as rate cut hopes fade

Gold prices slipped 0.4% on Monday to $2,023.60 per ounce by 15:10 GMT, as investors pulled back expectations for a US interest rate cut at the Federal Reserve’s March policy meeting. The dip comes after Fed guidance last week signalling potential delays to rate cuts until Q3, pending further review of inflation figures.

Traders are now seeing just a 43.5% chance of a March cut, a sharp drop from over 70% odds last week, according to CME FedWatch tool data. Fading prospects of near-term rate relief have softened demand for gold as a safe-haven play.

A stock market rally is also curbing flows into gold presently. With less need for shelter from volatility, attention has turned away from bullion.

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As higher rates lift the opportunity cost of holding zero-yield gold, Fed guidance is key for price action. Investors now look ahead to US PMI, GDP and consumer spending data that may influence the central bank’s rate hike timeline and the near-term path for gold.

The shifting rate outlook has placed pressure on gold prices recently. Further delays to cuts could weigh if the equity rally endures.