NEW YORK: Gold prices inched higher on Monday as investors anticipated a potential interest rate cut by the Federal Reserve this week, with focus on the central bank’s language on rate cuts for next year.
Spot gold was up 0.1% to $2,650.86 per ounce as of 0532 GMT. Meanwhile, US gold futures slipped 0.2% to $2,669.00. “A 25 basis point rate cut this week has been fully priced by markets, so the focus will be on whether this will be a ‘hawkish cut’, where US policymakers may set the stage for a potential rate hold into January, given above-target inflation, some economic resilience and uncertainties over Trump’s policies ahead,” IG market strategist Yeap Jun Rong said. Investors view it as a near-given that the Fed will cut rates by a quarter point at its Dec. 17-18 meeting.
However, markets only priced in an 18% chance of a reduction in January, according to CME’s FedWatch tool.
Gold and silver demand should remain strong until US and global growth puts in a floor, with buying as a hedge against equity downside, i.e. until US interest rates get to neutral, Citi said in a note, adding that it sees “gold and silver peaking around 4Q’25/1Q’26.” Elsewhere, on the geopolitical front, Israeli strikes in Gaza killed at least 53 Palestinians, while the Israeli military said its air and ground forces in the north of the enclave killed dozens of militants and captured others.
Non-yielding bullion tends to shine in a lower interest rate environment and during economic or geopolitical uncertainty. “Over the past month, gold prices have pulled back from the $2,720 level on at least two occasions, which makes it a key resistance for buyers to overcome ahead to pave the way for more upside,” Yeap said. Spot silver slipped 0.2% to $30.50 per ounce, platinum shed 0.6% to $918.90, while palladium was steady at $953.10.
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