Gold prices remained near a one-month low after the U.S. Federal Reserve’s latest policy signals boosted the dollar and U.S. Treasury yields. The Fed’s decision to slow the pace of its monetary easing cycle next year weighed on the precious metal, making it more expensive for holders of other currencies.
Gold Market Overview
Spot gold was little changed at $2,588.80 per ounce as of 0008 GMT, after plunging more than 2% overnight to its lowest level since November 18. U.S. gold futures also saw a decline, down 1.9% at $2,602.70.
The Federal Reserve’s recent decision to cut interest rates by 25 basis points to a range of 4.25%-4.50% was followed by its updated economic projections, indicating an additional 0.5% in rate cuts by the end of 2025. In response, the dollar index surged to its highest level in two years, putting pressure on gold prices, as the stronger dollar makes the metal more costly for buyers using other currencies. Meanwhile, U.S. Treasury yields experienced a notable uptick.
Market participants are now anticipating that the Fed will keep its benchmark overnight rate unchanged during its next policy meeting in late January. As higher rates reduce the appeal of gold, a non-yielding asset, traders are closely monitoring key economic data for further insights on future monetary policy.
Global Economic Developments
The Hong Kong Monetary Authority (HKMA) followed the Fed’s lead, cutting its base interest rate by 25 basis points to 4.75% in a move to support the local economy.
Meanwhile, the Indian government is reassessing the surge in gold imports, which contributed to a widening trade deficit in November and sent the rupee to an all-time low. Two government sources informed Reuters that this issue is under scrutiny as it affects both the nation’s trade balance and currency stability.
Other Precious Metals
In other precious metals, spot silver held steady at $29.37 per ounce. Platinum saw a slight decline of 0.4%, trading at $915.45, while palladium eased 0.2% to $901.30.
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