Gold hits two-week low on anticipation of smaller rate cut from US Fed

Gold prices fell to their lowest point in nearly two weeks on Wednesday, marking the fourth consecutive session of declines as markets adjusted to lower expectations for rate cuts at the U.S. Federal Reserve's upcoming policy meeting.

As of 9:42 a.m. ET (1342 GMT), spot gold decreased by 0.2 per cent to $2,486.99 per ounce, while U.S. gold futures also slipped 0.2 per cent to $2,518.30.

“Gold traded weaker, declining by ₹170 to ₹71,200 in MCX and $9 to $2,483 in Comex, primarily due to profit booking ahead of the expected Non-Farm Payroll data, which is anticipated to be higher than the previous month. This could reduce the likelihood of a 0.50 basis point rate cut in the upcoming U.S. Federal Reserve policy meeting on September 18. With a 0.25 basis point cut already priced in, market participants are now awaiting clear signals for a potential 0.50 basis point cut or at least definitive indications of future rate cuts,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

What's weighing on gold prices?

Traders are confident that the U.S. Federal Reserve will cut interest rates this month, with the CME FedWatch tool indicating a 59% probability of a 25-basis-point reduction.

This week's U.S. economic data, including Thursday's ADP employment report and jobless claims, along with Friday's non-farm payrolls report, will be closely analyzed for insights into the Fed's rate-cut trajectory.

StoneX analyst Rhona O'Connell noted that bullion was also under pressure due to margin calls triggered by the weakness in equities.

Global shares declined on Wednesday, led by a drop in tech stocks, following a record sell-off in U.S. chipmaker Nvidia and growing concerns about slowing global growth, which weighed on riskier assets.

Spot silver increased by 0.3 per cent, reaching $28.12 per ounce. Platinum also climbed by 0.3 per cent to $905.82, while palladium declined by 0.4 per cent to $934.25.