Gold was flat on Wednesday after a sharp drop in prices in the previous session, as a US Federal Reserve official’s hawkish comments dampened expectations for a March interest rate cut, while traders awaited comments from more Fed speakers this week.

Gold rises as safe-haven demand

Fundamentals

• Spot gold was unchanged at $2,027.62 per ounce, as of 0236 GMT, after stooping 1.3% lower in the previous session- its biggest single day decline since Dec. 4.

• US gold futures were little changed at $2,030.90.

• Fed Governor Christopher Waller said on Tuesday that while inflation was approaching the central bank’s 2% goal, the Fed should not rush to lower interest rates until lower inflation can clearly be sustained.

• A report over the weekend showed Atlanta Fed President Raphael Bostic said inflation could “see-saw” if policymakers cut rates too soon, while his European counterparts also pushed back against market expectations of rapid rate cuts this year.

• Waller’s comments triggered a broad sell-off, pulling all three major US stock indexes lower, and sent the dollar to a more than one-month high as benchmark US Treasury yields logged their biggest daily move upwards in more than three months on Tuesday.

• A stronger dollar makes bullion more expensive for other currency holders, while higher rates decrease gold’s appeal.

• Traders are pricing in an about 65% chance of a rate cut by the US central bank in March, down from about 75% probability seen on Tuesday morning, according to the CME FedWatch tool.

• However, money markets were still betting on six rate cuts of 25 basis points each this year, according to LSEG’s interest rate probability app, IRPR.

• Other precious metals fell by 0.1% each, with Spot silver at $22.89 per ounce, platinum at $894.29, and palladium at $937.52.