Gold prices experienced a slight dip ahead of the Federal Reserve’s anticipated rate decision, with traders focused on potential clues regarding the central bank’s monetary policy for 2025. The precious metal traded near $2,645 per ounce, down 0.2% from the previous session, as market participants awaited the Fed’s final policy meeting of the year, set to occur later on Wednesday.
While markets are largely expecting a quarter-point rate cut, the outlook for 2025 remains uncertain, particularly with the potential for inflationary policies under the incoming Trump administration. Investors are keen to see if the Fed adjusts its language in the post-meeting policy statement, signaling a possible change in the trajectory of borrowing costs. The Fed is also scheduled to release updated economic forecasts, which could provide additional guidance for the year ahead. Typically, lower interest rates are favorable for gold, as the metal offers no yield.
In addition to the Fed’s actions, traders are closely watching key U.S. economic data, including gross domestic product (GDP) figures and the core personal consumption expenditures (PCE) index—both set for release later this week. The core PCE index is the Fed’s preferred measure of underlying inflation.
Gold has had a strong performance this year, rising by 28%, putting it on track for its largest annual gain since 2010. This surge has been fueled by U.S. monetary easing, safe-haven demand, and sustained purchases by central banks globally. As of 7:33 a.m. in London, spot gold was down 0.1%, trading at $2,644.86 per ounce. The Bloomberg Dollar Spot Index remained unchanged, while silver, palladium, and platinum all saw declines.
Indian gold imports hit a record high in November following a reduction in customs duties by the Indian government. Full-year demand for gold in India is expected to rise by 7%, reaching 905 tons in 2024, the second-highest volume since 2015, according to a report by consulting firm Metals Focus. However, the report also predicted a 4% decline in demand for 2025 due to high bullion prices, which are likely to dampen consumption next year.
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