Consumer price index (CPI) inflation data on Tuesday showed that U.S. inflation grew more than expected in January, giving credence to recent warnings from the Fed that sticky inflation will keep the bank from cutting interest rates.
The CME Fedwatch tool showed traders scaling back bets on rate cuts in May and June, although traders were still pricing in a 51% chance for a 25 basis point cut in June.
Still, the prospect of higher-for-longer rates bodes poorly for gold, given that higher rates push up the opportunity cost of investing in the yellow metal. This trend has limited any major gains in gold prices over the past two years.
The yellow metal made limited headway beyond $2,050 in recent sessions, although it still gained about 10% in 2023.
The CME Fedwatch tool showed traders scaling back bets on rate cuts in May and June, although traders were still pricing in a 51% chance for a 25 basis point cut in June.
Still, the prospect of higher-for-longer rates bodes poorly for gold, given that higher rates push up the opportunity cost of investing in the yellow metal. This trend has limited any major gains in gold prices over the past two years.
The yellow metal made limited headway beyond $2,050 in recent sessions, although it still gained about 10% in 2023.