Spot gold stabilized on Tuesday ahead of the Federal Reserve’s policy meeting, with the market eagerly awaiting the U.S. central bank’s outlook for guidance on the path of interest rates in 2025.
Spot gold rose 0.1% to $2,655.07 an ounce, as of 0335 GMT. U.S. gold futures were flat at $2,672.40.
“The market has nearly landed a 25 basis point decline; however, the 2025 outlook, the Fed’s dot chart, and statements from Fed Chairman (Jerome) Powell will be key to assessing the Fed’s position. Fed for the first half of next year,” said Jigar Trivedi, senior analyst at Reliance Securities.
“The yellow metal could see a technical correction, but this would be an opportunity to position itself on the upside.”
The Federal Open Markets Committee (FOMC) is scheduled to meet later today for its final policy meeting of 2024 and will announce its interest rate decision on Wednesday.
Markets see there as a 96.3% chance that the interest rate will be cut by a quarter point at the meeting, but have only factored in a roughly 16.5% chance of a similar reduction in January, according to the CME’s FedWatch tool.
The Bank of Japan, the Bank of England, the Riksbank and Norges Bank are expected to deliver their verdict on December 19 and the European Central Bank is expected to cut rates again next year if inflation settles at its target of 2%.
Gold with no yield tends to shine in a low interest rate environment and during economic or geopolitical crises.
Geopolitically, the United States hit North Korea and Russia on Monday with new sanctions that the Treasury Department said target Pyongyang’s financial activities and military support for Moscow.
Traders are also watching the release of key data this week, including US GDP and inflation figures, which could further influence market sentiment.
Spot silver fell 0.2 percent to $30.47 an ounce, platinum settled at $936.30, while palladium was steady at $947.41.
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