Gold Prices Dip Ahead of U.S. Federal Reserve Meeting
Gold prices dipped slightly during trading on Tuesday, as market participants turned their attention to the ongoing two-day meeting of the U.S. Federal Open Market Committee (FOMC). Spot gold prices fell approximately 0.1% to $4,183.30 per ounce, while December futures for U.S. gold settled at $4,214.40 per ounce.
Kelvin Wong, a senior market analyst at OANDA, noted: "Investors are generally repositioning their portfolios in anticipation of the U.S. central bank meeting." He further stated: "Earlier this month, Fed Chair Jerome Powell signaled a hawkish stance regarding interest rate cuts, prompting Treasury bond investors to reevaluate their strategies."
This price decline coincides with rising yields on U.S. benchmark ten-year Treasury bonds, which reached their highest level in two and a half months on Monday, thereby increasing the opportunity cost of holding non-yielding assets like gold.
Market expectations suggest that the Federal Reserve may lower interest rates this week, with indications that any future monetary easing could be more constrained. According to the CME Group's FedWatch tool, there is currently an 87% probability of a quarter-point rate cut during this meeting, a slight decrease from 90% on Monday.
These expectations follow various economic indicators released last week, including the Personal Consumption Expenditures Price Index, which aligns with forecasts, and an uptick in consumer confidence for December. However, private sector employment saw its largest drop in over two and a half years, while unemployment claims fell to their lowest levels in three years.
In terms of other precious metals, silver remained steady at $58.10 per ounce after reaching a historic high of $59.32 on Friday. Platinum increased by 0.5% to $1,650.20 per ounce, while palladium rose by 0.4% to $1,471.25 per ounce.
