Gold prices edged higher on Wednesday as attention turned to the Federal Reserve’s next monetary policy decision, with the US central bank expected to implement a third rate cut this year and provide guidance on its plans for 2025.
Spot gold rose 0.1% to $2,648.43 an ounce by 0237 GMT. U.S. gold futures were flat at $2,663.20.
The US Fed began its two-day policy meeting on Tuesday, focusing on the central bank’s updated economic projections and dot chart, which could shift expectations for the path of rates through 2025 and 2026.
U.S. retail sales rose more than expected in November, adding to warmer inflation readings in recent months and suggesting the central bank may pause rate cuts in January.
Markets see there as a 97.1% chance that rates will be cut by a quarter point, but have only priced in about a 16.3% chance that another cut will take place in January, according to the CME’s FedWatch tool.
“We could see a rise in the price of gold at the close of the day after the Fed’s announcement. The market may have priced in too many cuts for next year, so if the Fed implies two cuts , this could benefit gold for a rise,” said Matt Simpson, a senior analyst at City Index.
On the political front, the Bank of Japan, Bank of England, Riksbank and Norges Bank are expected to deliver their verdicts later this week.
Chile’s central bank cut its benchmark interest rate by 25 basis points to 5.00% on Tuesday, extending a cycle of easing that began last year.
Gold with no yield tends to do well in a low interest rate environment.
Traders are also closely watching key US GDP and inflation data, which will be released later this week, for additional insights.
Spot silver was down 0.2% at $30.46 an ounce, platinum lost 0.1% to $937.72, while palladium gained 0.3% to 937.04 dollars.
