Market Update: Gold Prices Steady Ahead of Federal Reserve Meeting
Gold prices exhibited stability on Tuesday as investors remained focused on the upcoming meeting of the US Federal Reserve, assessing potential shifts in monetary policy that may arise from the previous administration’s economic strategies.
The spot price of gold maintained at $2,741.63 per ounce following a decline of over 1% yesterday, influenced by a significant downturn attributed to a low-cost artificial intelligence model developed in China.
Meanwhile, US gold futures saw a slight increase of 0.2%, reaching $2,743.10.
Market analysts anticipate that the Federal Reserve will likely opt to keep interest rates unchanged in their meeting scheduled for Wednesday. However, previous President Donald Trump’s recent calls for a reduction in borrowing costs could introduce volatility into these expectations.
Should the Federal Reserve decide to hold interest rates steady, it would mark a critical juncture in the interest rate reduction cycle that commenced in September.
“If Federal Reserve Chair Jerome Powell indicates a possibility for interest rate reductions in the upcoming months, it could put downward pressure on Treasury yields and bolster gold prices,” stated Tim Water, Chief Market Analyst at K.CM. He also noted that the $2,800 level is a short-term target for gold.
Gold’s appeal as a non-interest-bearing asset tends to increase in a low-interest-rate environment. Nonetheless, recent data showed a significant drop in China’s net gold imports through Hong Kong, which decreased by 84% in December compared to the previous month, representing the lowest import levels since April 2022.
In terms of other precious metals, silver prices fell 0.4% to $30.07 per ounce. Palladium also saw a decline of 0.4%, settling at $957, while platinum decreased by 0.4% to $943.35.