Gold prices rose on Monday as investors anticipated a potential interest rate cut by the Federal Reserve this week, focusing on the central bank’s language regarding rate cuts next year.
Spot gold was up 0.1% at $2,652.07 an ounce by 0155 GMT. Meanwhile, US gold futures slipped 0.2% to $2,670.90.
A 25 basis point rate cut this week has been fully priced in by markets, so the focus will be on whether it will be a “hawkish cut”, where US policymakers could prepare the ground for a potential rate hold in January, given above-target inflation, some economic resilience and uncertainty over upcoming Trump policies,” said Yeap Jun Rong, market strategist of IG.
Investors consider it almost certain that the Fed will reduce its rates by a quarter of a point at its meeting on December 17 and 18. Markets are pricing in a 93.4% chance of a 25 basis point cut, but have only priced in about an 18% chance of another cut in January, according to the CME’s FedWatch tool.
Geopolitically, Israeli strikes in Gaza have killed at least 53 Palestinians, including a journalist and rescue workers, according to medics, while the Israeli military said its air and ground forces in the north of the enclave have killed dozens of militants and captured others.
Non-yielding bullion tends to perform well in a low interest rate environment and when there is economic or geopolitical uncertainty.
“Over the past month, gold prices have moved away from the $2,720 level on at least two occasions, making it a key resistance that buyers must overcome to pave the way for further upside,” Mr Yeap said.
Silver was steady at $30.54 an ounce, platinum lost 0.3% to $922.05, while palladium gained 0.4% to $956.58.
