Gold Prices Plunge to Two-Week Low as Investors Await US Inflation Data

Gold prices dropped to their lowest level in more than two weeks on Thursday (Feb 29, 2025), as the US dollar strengthened. Investors are now closely watching US inflation data, which could provide insights into the Federal Reserve's (The Fed) monetary policy direction.

According to CNBC International, spot gold fell 1.1% to $2,885.13 per ounce after hitting its lowest level since February 12 during trading. Previously, gold had reached a record high of $2,956.15 on Monday (Feb 26, 2025) due to increased demand for safe-haven assets.

Meanwhile, US gold futures also weakened by 1.2%, closing at $2,895.9 per ounce.

“The gold price trend is quite clear, and short-term fluctuations and profit-taking are a normal part of the market cycle,” said Allegiance Gold’s Chief Operating Officer, Alex Ebkarian.

The strengthening US dollar was a major factor putting pressure on gold prices. The dollar index rose 0.7%, making gold more expensive for holders of other currencies.

Now, market participants are eagerly awaiting the release of the US Personal Consumption Expenditures (PCE) Index data on Friday (Mar 1, 2025). According to a Reuters survey, PCE inflation is expected to remain at 0.3%.

TD Securities’ Head of Commodity Strategy, Bart Melek, warned that if US inflation data deviates from expectations, markets could react negatively, reducing the likelihood of a Fed rate cut.

Fed Policy Outlook and Market Reactions

Currently, markets anticipate that the Fed will cut interest rates at least twice this year, with an estimated total easing of around 55 basis points by 2025. Investors are also looking forward to speeches from several Fed officials scheduled for today to gain further insights into US monetary policy.

Meanwhile, US President Donald Trump announced on Thursday that import tariffs on Mexico and Canada will take effect on March 4, alongside an additional 10% tariff on imports from China.

According to Ebkarian, these tariff policies could act as a catalyst for gold prices to break the $3,000 per ounce threshold within the next 30 to 60 days, depending on market reactions.

In other metals markets, silver prices dropped 1.2% to $31.45 per ounce, platinum fell 1.2% to $954.05, and palladium declined 0.6% to $921 per ounce.