By Sama Marwan,
Global gold prices saw a slight uptick during today’s trading but remain on track for a weekly decline following the US Federal Reserve’s announcement of a slower pace of interest rate cuts next year. Meanwhile, markets await the release of US inflation data later today.
Gold prices rose by 0.4% to reach $2,607 per ounce, up from an opening price of $2,594 per ounce, according to Gold Billion analysis. However, on Wednesday, gold prices dropped to a one-month low of $2,583 per ounce, marking a 2.3% decline after the Federal Reserve meeting. For the week, gold is set to record a 1.6% drop.
The Federal Reserve announced a 25-basis-point rate cut this week, aligning with market expectations. However, statements by Chair Jerome Powell and projections from committee members signaled a slower pace of rate reductions next year due to persistent inflation above the Fed’s target and uncertain economic forecasts. Markets are now pricing in only two rate cuts next year, down from earlier expectations of four.
Expectations of higher US interest rates negatively impact gold prices by increasing the opportunity cost of holding non-yielding assets like gold. The Fed’s anticipated slowdown in rate cuts in 2025 has exerted additional downward pressure on gold prices.
In other economic developments, data released on Thursday showed faster-than-expected US economic growth in the third quarter and a larger-than-expected drop in jobless claims. These figures bolster expectations that the Federal Reserve will adopt a cautious approach to easing monetary policy, potentially dampening demand for gold as a safe haven.
Today’s focus will be on the release of the Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, which is expected to offer further insights into US economic prospects.
On the international front, Switzerland’s gold exports rose in November, driven by increased shipments to India and a recovery in deliveries to China and Hong Kong compared to October. However, India’s gold imports are expected to slow significantly in December, as rising prices prompt consumers to scale back purchases.
