Dec 18 2024: Gold prices remained stable in early Asian trading on Wednesday, following a decline in the previous session. Investors are closely monitoring the Federal Reserve’s December policy meeting, which is anticipated to end with a 25-basis-point rate cut. However, concerns about the Fed’s longer-term rate strategy continue to weigh on sentiment.
Spot gold was little changed at $2,646.10 per ounce, while February gold futures dipped slightly to $2,660.72 per ounce by 22:51 ET (03:51 GMT).
Fed Rate Path and Dollar Strength Apply Pressure
While the Fed is expected to implement a rate cut on Wednesday, the focus will shift to future economic projections and Chair Jerome Powell’s remarks. Signals of a slower rate-cut trajectory in 2025, amid persistent inflation pressures, could dampen market optimism.
Gold’s appeal often diminishes when interest rates rise, as higher rates increase the opportunity cost of holding non-yielding assets like gold. Additionally, a stronger U.S. dollar—bolstered by higher rates—makes gold more expensive for international buyers, further suppressing demand.
The Fed’s long-term projections will also coincide with economic uncertainties under incoming President Donald Trump, who is expected to adopt policies that could stoke inflation.
Other major central banks, including the Bank of Japan and the Bank of England, are also meeting this week. While the BOE is likely to keep rates steady, markets remain divided on the BOJ’s potential for additional rate hikes.
Other Precious Metals and Copper Decline
Platinum futures edged down 0.1% to $942.20 per ounce, while silver futures fell 0.3% to $30.845 per ounce.
In industrial metals, copper prices slipped amid concerns over demand from China, the world’s largest consumer of the red metal. Weak property sector data and subdued consumption have overshadowed expectations for looser monetary policies and fiscal support in China.
Benchmark London Metal Exchange copper futures dropped 0.4% to $8,973.50 per ton, while one-month copper futures fell 0.5% to $4.1255 per pound.
Despite Beijing’s efforts to boost the economy—including a projected increase in the budget deficit to 4% of GDP in 2025 and a GDP growth target of 5%—market sentiment remains cautious regarding China’s recovery trajectory.
