PRECIOUS-Gold prices gain as traders assess hopes for sizeable Fed rate cut

Credit: REUTERS/KIM HONG-JI

By Harshit Verma

Feb 1 (Reuters) - Gold climbed for a fourth straight day on Thursday as investors held onto hopes the Federal Reserve would trim interest rates by a significant margin this year, even after the U.S. central bank pushed back against the idea of a cut in March.

The Fed is confident that inflation will come to the desired 2% range, and they have kept the window open for interest rate cuts, just not so much for one in March, keeping gold supported, said Jigar Trivedi, a senior analyst at Reliance Securities.

The Fed left interest rates unchanged and knocked down the idea that the U.S. central bank could cut rates in the spring, but dropped a long-standing reference to possible further hikes.

Futures pared bets for a rate cut in March to 35.5% from 90% at 2023-end, but increased chances of a reduction in May to 96%, according to LSEG's interest rate probability app IRPR.

Traders are pricing in about 142 basis points (bps) of Fed rate cuts for this year, up from bets of about 130 bps of reductions on Wednesday morning.

Markets also took stock of troubles at regional U.S. lender New York Community Bancorp, increasing appeal for safe-haven assets such as bullion and U.S. Treasury bonds. Yields on benchmark 10-year Treasury notes US10YT=RR, which are inversely related bond prices, languished near their lowest in more than two weeks.

Data showed U.S. private payrolls rose far less than expected in January. Investors are now awaiting Friday's non-farm payrolls (NFP) report for January.

(Reporting by Harshit Verma in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)

((Harshit.Verma@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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