Gold prices fell to a more than one-month low on Wednesday as strong economic data strengthened dollar and Treasury yields and lowered market expectations of a U.S. rate cut in March.
Spot gold was down 1.1% at $2,006.09 per ounce, its lowest price since Dec.13. It fell 1.3% in the previous session in its biggest single-day decline since Dec. 4, 2023.
U.S. gold futures fell 1% to $2,009.
U.S. retail sales increased more than expected in December, keeping the economy on solid ground heading into the new year.
The U.S. dollar hovered at a one-month high following robust retail sales data. While yields on the benchmark U.S. 10-year Treasury notes also gained.
"The markets are having doubts about interest rate cuts if the Fed can cut sooner than later, which is pressuring gold prices. With the dollar being strong and cuts taking time, it is hard for gold to hold a rally," said Bob Haberkorn, senior market strategist at RJO Futures.
"However, geopolitical risk will keep providing a base to prices and hold them around $2,000."
Fed Governor Christopher Waller's on Tuesday said that the central bank should not rush to cut rates until lower inflation can be sustained.
Traders are now pricing in around a 57% chance of a rate cut in March, according to the CME FedWatch tool.
"Technically gold is at a little bit of risk here, if we close below $2,020 it signals that the sideways range has broken to the downside," said Tai Wong, a New York-based independent metals analyst.
Spot silver fell 1.6% to $22.548 per ounce, and platinum declined 1.2% to $884.29.
Palladium slipped 2.1% to $917.02, marking its lowest since 2018.
The rate at which platinum is displacing palladium in the production of autocatalysts is slowing due to the sister metals approaching price parity, analysts said.