Gold Prices Dip Ahead of Federal Reserve Meeting
Gold prices saw a minor decrease on Tuesday, with investors turning their attention to the two-day meeting of the U.S. Federal Open Market Committee. The spot price of gold fell approximately 0.1% to $4,183.30 per ounce, while December gold futures remained steady at $4,214.40 per ounce.
Kelvin Wong, senior market analyst at OANDA, commented on the market dynamics, stating, "Investors are extensively repositioning ahead of the Federal Reserve meeting." He added, "Earlier this month, Jerome Powell, the Chair of the Federal Reserve, indicated potential interest rate cuts during his press conference, prompting U.S. Treasury bond investors to reassess their positions."
This decline coincides with rising yields on ten-year U.S. Treasury bonds, which reached their highest level in two and a half months on Monday, increasing the opportunity cost of holding non-yielding assets like gold.
Market expectations largely anticipate that the Federal Reserve will lower interest rates this week, with indications suggesting stricter conditions for any further monetary easing next year. The CME Group's FedWatch tool indicates that markets currently price in an 87% probability of a quarter-point cut during the meeting, down from 90% on Monday.
These expectations follow mixed economic data from the previous week, with the personal consumption expenditures price index— the Federal Reserve's preferred measure of inflation—aligning with forecasts, and consumer confidence rising in December. Meanwhile, private sector employment recorded its largest decline in over two and a half years, while initial jobless claims fell to their lowest level in three years.
In other precious metals, silver stabilized at $58.10 per ounce after reaching a historic high of $59.32 on Friday. Platinum rose by 0.5% to $1,650.20 per ounce, while palladium increased by 0.4% to $1,471.25 per ounce.
