Gold Prices Dip as Investors Await Signals from the Federal Reserve
Gold prices saw a modest decline during trading on Tuesday, with investors closely monitoring the two-day meeting of the U.S. Federal Reserve's Open Market Committee. Spot gold fell by 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 movement, stating, "Investors are largely readjusting their positions ahead of the Federal Reserve's meeting." He added, "Earlier this month, Fed Chair Jerome Powell provided strong indications regarding a potential interest rate cut during his press conference, prompting U.S. Treasury bond investors to reassess their positions."
This decline comes as U.S. Treasury yields on ten-year bonds reached their highest level in two and a half months on Monday, increasing the opportunity cost of holding non-yielding assets like gold.
Market participants largely expect the Federal Reserve to announce an interest rate cut this week, with forecasts suggesting that this may be accompanied by signals indicating stricter conditions for any further monetary easing next year. The CME Group's FedWatch tool currently indicates an 87% probability of a 25 basis point cut at the meeting, down from 90% on Monday.
These expectations follow mixed economic data from last week, where the personal consumption expenditures price index—the Fed's preferred inflation measure—met expectations, and consumer confidence improved in December. Meanwhile, private sector employment recorded its largest decline in over two and a half years, while jobless claims fell to their lowest level in three years.
In other precious metals, silver stabilized 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.
