Gold's rapid rise has stopped

Gold extends losses as U.S. inflation data strengthens Fed’s focus. Gold snapped a record nine-day rally as U.S. inflation beat forecasts for a second month in February and the Fed’s cautious approach to cutting rates. Spot bullion took a hit as investors digested the data pressure and then fell 1% to $2,161.14 an ounce as of 9:54 a.m. in New York. Gold had reached an all-time high of $2,195.15 on Friday. “February CPI came in warmer than expected. That means the Fed may not be ready to cut rates just yet,” said Bart Melek, head of global commodity strategy at TD Securities. The Fed’s long-awaited move to looser monetary policy is expected to boost gold’s appeal compared with yield-yielding assets such as bonds. Policymakers need to see more evidence that inflation is moving toward its 2% target before they lower borrowing costs, he said. Swap markets now show a 63% chance of a June rate cut. The precious metal has rebounded sharply this month, hitting a series of new record highs. But the size and speed of gold’s rally surprised many seasoned market watchers, even if there was no clear rationale for the sudden surge. Still, bullion has long been supported by major purchases by central banks in emerging markets, led by China. Rising geopolitical risks, such as tensions in the Middle East from Gaza to the Red Sea and Russia’s war in Ukraine, have also boosted gold’s appeal as a safe-haven asset.