Gold steady in Wednesday morning trading ahead of the Fed’s policy meeting and economic outlook statement this afternoon.
Investors were awaiting the statement after the meeting for indications on the pace of the central bank’s expected rate cuts in 2025. The Fed is widely expected to cut rates for the third time this year on Wednesday.
Front-month gold futures fell 0.3% Tuesday to settle at $2,662.00 an ounce on Comex, and the most-active February contract slid 0.5% in the first two days of the week. Bullion dropped 2.5% last month after rising 3.4% in October and gaining 5.2% in September. The metal is up 28% in 2024. The February contract is currently down $7.7 (-0.29%) an ounce to $2654.30 and the DG spot price is $2639.40.
More than 98% of the investors tracked by the CME FedWatch Tool are betting that the Fed will cut rates by another 25 basis points Wednesday, ending the year at 4.25% to 4.50%. The rest expect the central bank to keep rates unchanged. Interest rate cuts are considered bullish for gold, making the yellow metal a more attractive alternate investment.
But next year’s actions are less certain amid the potential hit to the economy of President-elect Donald Trump’s stated plans for tariffs as well as the possible economic impact of deportations. Investors will be closely reading the Fed’s statement at the end of the meeting and parsing comments by Fed Chairman Jerome Powell for glimpses of the policymakers’ thinking.
Fed policymakers voted unanimously at November’s meeting to cut interest rates by 25 basis points to 4.50% to 4.75%. The central bank also cut rates in September. Before those reductions, the Fed had kept rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022. The Fed began raising rates during the pandemic to combat surging inflation.
The Fed’s favorite inflation measure, the personal consumption expenditures price index, comes out Friday with November data, as does consumer sentiment for December. U.S. consumer price index and producer price index data for November came in in line with economists’ expectations last week.
In addition to the potential cuts, geopolitical and economic risk have kept prices elevated. This includes some uncertainty over the conflicts in Ukraine and the Middle East as well as tariffs and deportations.
Front-month silver futures lost 0.4% Tuesday to $30.92 an ounce on Comex, and the most-active March contract declined 0.3% in the first two days of the week. Silver fell 5.2% in November after advancing 4.3% in October and rallying 7.9% in September. It’s up 28% in 2024. The March contract is currently down $0.151 (-0.49%) an ounce to $30.770 and the DG spot price is $30.30.
Spot palladium decreased 1.1% Tuesday to $946.50 an ounce and tumbled 2% so far this week. Palladium declined 12% last month after increasing 11% in October and gaining 3.2% in September. Palladium is down 15% this year. The DG spot price is currently down $13.70 an ounce to $932.80. Currently, the DG spot price is down $15.20 an ounce to $934.00.
Spot platinum edged up 0.2% Tuesday to $946.70 an ounce and has rallied 1.9% so far this week. Platinum declined 4.2% in November after rising 1.5% in October and increasing 5.6% in September. Platinum is down 5.1% this year.
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