Gold prices declined on Tuesday due to a stronger US dollar and rising Treasury yields. Investors are awaiting the Federal Reserve's interest rate decision, anticipating a cautious approach to monetary policy easing.
Gold prices dipped on Tuesday, influenced by a strengthening US dollar and rising Treasury yields. Investors are anticipating the Federal Reserve 's interest rate decision, expecting a cautious approach to monetary policy easing in the coming year. Spot gold declined by 0.4% to $2,642.72 per ounce, while US gold futures dropped 0.5% to $2,658.00. The dollar and benchmark US 10-year Treasury yields both increased ahead of the Fed's final policy meeting of the year.
Although a quarter-point interest rate cut is widely expected on Wednesday, traders believe the central bank will gradually reduce borrowing rates in 2024. CME's FedWatch tool indicates a 97% probability of a 25 basis point cut this week, but only a 17% chance of a reduction in January. 'Gold traders are likely hesitant to make significant moves until after the crucial FOMC rate decision,' commented Han Tan, Chief Market Analyst at Exinity Group. The Fed meeting will provide insights into potential future rate cuts in 2025 and 2026, and whether the central bank will adjust its easing stance due to inflation concerns under the incoming Trump administration. If the Fed adopts a hawkish message and signals a potential pause in policy easing, gold prices might drop to $2,600, with the 50-day moving average offering support, according to Tan. Traders are also monitoring key US GDP and inflation figures due later in the week, which could affect market sentiment. India, a major gold consumer, is anticipated to experience a sharp decline in gold imports during December following record purchases in November, as revealed by trade and government officials. In other metals, spot silver decreased by 0.7% to $30.31 per ounce, platinum fell by 0.3% to $932.78, and palladium dropped by 1.3% to $935.03
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