Gold Holds Decline as Focus on Fed’s Rate Outlook for Next Year

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Gold Holds Decline as Focus on Fed’s Rate Outlook for Next Year

general :: 2024-12-18 :: source - bloomberg

By Sybilla Gross

(Bloomberg) -- Gold held a modest decline ahead of the Federal Reserve’s upcoming rate decision, with traders looking for clues about next year’s monetary-policy path.

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Bullion traded near $2,645 an ounce, after slipping 0.2% in the previous session, as traders waited for the US central bank’s final policy meeting for the year later on Wednesday. While markets widely expect another quarter-point cut, what will happen in 2025 isn’t clear as the incoming Trump administration may implement inflationary policies.

Fed policymakers may adjust their language in the post-meeting policy statement and raise the projected path of borrowing costs. They will also give updated quarterly economic forecasts. Lower rates are typically positive for gold, which doesn’t pay interest.

Traders will also be monitoring US data for further clues about the 2025 outlook, with gross domestic product and the core personal consumption expenditures index — the Fed’s preferred gauge of underlying inflation — due later this week.

The precious metal has risen by 28% this year, putting it on track for its biggest annual gain since 2010. It’s been supported by monetary easing in the US, safe-haven demand and sustained buying by the world’s central banks.

Spot gold dipped 0.1% to $2,644.86 an ounce as of 7:33 a.m. in London. The Bloomberg Dollar Spot Index was steady. Silver, palladium and platinum were all lower.

Elsewhere, the value of Indian gold imports surged to a record in November after the government cut customs levies. Full year demand is expected to grow by 7% to 905 tons in 2024 — the second-highest volume since 2015, according to a report this week from consulting firm Metals Focus. Still, elevated prices for bullion will likely weigh on consumption next year, with demand set to fall 4% in 2025, it added.

--With assistance from Preeti Soni.