Gold extends drop after Fed officials express inflation concern

The bullion is unlikely to hit US$3,000 an ounce by the end of the year, pushing the forecast to mid-2026

Gold fell for a second day as comments from Federal Reserve officials over the weekend reinforced the view the US central bank will take a more cautious approach to cutting rates in 2025.

Bullion traded near US$2,630 an ounce after San Francisco fed president Mary Daly and fed governor Adriana Kugler emphasised the need to finish off the fight against inflation and reach the authority’s 2 per cent target. Lower rates tend to benefit gold, as it doesn’t pay interest.

The Fed last month reined in the number of rate cuts it expects to make this year, as Chair Jerome Powell signalled greater caution over how quickly policymakers can continue reducing borrowing costs. That may be a headwind for the precious metal after it surged 27 per cent last year in a record-breaking run that was propelled in part by US monetary easing.

Goldman Sachs Group said in a note that it no longer sees bullion reaching $3,000 an ounce by the end of the year, pushing the forecast to mid-2026 on fewer Fed cuts.

Spot gold dropped 0.5 per cent to US$2,627.60 an ounce as of 7.56 am in London, after falling 0.7 per cent on Friday. The Bloomberg Dollar Spot Index dipped 0.1 per cent. Silver was flat, while palladium and platinum slipped.

A raft of data this week – including non-farm payrolls and job openings – will be closely watched for a steer on the Fed’s easing trajectory as Donald Trump prepares to return to the White House this month. Minutes of the authority’s December meeting are also due this week. BLOOMBERG

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