Gold Prices Dip Slightly Ahead of U.S. Federal Reserve Meeting
Gold prices experienced a minor decline during Tuesday's trading, with investors focusing on the upcoming two-day meeting of the U.S. Federal Reserve's Open Market Committee. Spot gold fell by approximately 0.1%, reaching $4,183.30 per ounce, while U.S. gold futures for December remained stable at $4,214.40 per ounce.
Kelvin Wong, a senior market analyst at OANDA, commented on the market movement, stating, "Investors are broadly repositioning ahead of the U.S. central bank's meeting." He further clarified, "Earlier this month, Federal Reserve Chair Jerome Powell provided restrictive guidance on interest rate cuts during his press conference, prompting U.S. Treasury bond investors to reassess their positions."
This decline comes amid rising yields on U.S. ten-year 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 widely suggest that the Federal Reserve will reduce interest rates this week, with indications that any further monetary easing next year may be accompanied by more restrictive conditions. CME Group's FedWatch tool indicates that markets are currently pricing in an 87% probability of a quarter-point rate cut during the meeting, down from 90% on Monday.
These expectations arose following various economic data released last week, where the personal consumption expenditures price index—the Fed's preferred inflation measure—aligned with expectations, and consumer confidence improved in December. Meanwhile, private sector employment recorded its largest drop in over two and a half years, while unemployment claims fell to their lowest level in three years.
In other precious metals, silver held steady at $58.10 per ounce after reaching a record 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.
