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Gold prices slumped below $2,000 as speculation about an early Fed rate decrease wanes

11 Dec,2023
Gold prices slumped below $2,000 as speculation about an early Fed rate decrease wanes

Monday's saw a decline in gold prices below significant levels as traders retreated from their expectations that the Fed will start lowering interest rates earlier in 2024 due to positive job market figures.

Spot gold slipped 0.4% to $1,996.24 per ounce; meanwhile gold futures dipped 0.1% to $2,012.75 per ounce.

Prior to a Fed meeting later this week, when it is largely anticipated that the central bank will maintain interest rate stability, traders were also cautious about gold.

Following the release of Friday's nonfarm payrolls data, markets drastically reduced their expectations for a rate decrease as early as March 2024, which precipitated significant losses in gold.

After the reading, risk appetite increased even more since it indicated that the US economy was still strong enough to support the prospect of a "soft landing." Stock markets rose as gold prices declined.

Increased interest rates depress gold prices because they increase the opportunity cost of holding the yield-free yellow metal.

 

 

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