Gold held its footing above the US$4,200 mark during Asian deals on Wednesday, extending Tuesday’s rebound as traders turned their attention to the Federal Reserve’s interest rate decision and Chair Jerome Powell’s remarks.
By 4 pm AEDT (5 am GMT) spot gold prices were trading flat at US$4,206.98 per ounce.
The precious metal has been buoyed partly by the record-breaking rally in silver, with investors widely expecting the Fed to deliver a 25 basis point cut at the close of its two-day policy meeting later on Wednesday.
The CME Group FedWatch Tool indicates an 86.7% probability of such a move, with traders keen to learn how many cuts Federal Open Market Committee (FOMC) policymakers anticipate for 2026.
Market pricing also suggests a 20% chance of an additional rate cut in January, following Tuesday’s stronger-than-expected U.S. job opening and labour turnover survey (JOLTS) figures for September and October.
Powell’s tone will be a central focus for markets. Investors are eager to determine whether the December cut is intended as a risk-management step or the beginning of a deeper easing cycle.
The vote split between hawkish and dovish committee members is also expected to shape the central bank’s guidance for the year ahead.
Blerina Uruci, Chief U.S. Economist at T. Rowe Price, said: "With the Committee only having September employment and inflation prints along with some high-frequency data, I expect the December FOMC meeting will be a contentious one.
"The FOMC will likely decide to cut interest rates one more time this year, while also signaling that it will likely keep monetary policy on hold in 2026. This will be interpreted by markets as a hawkish cut."
The Fed’s updated “dot plot” will provide the clearest indication of how officials view the future path of interest rates. Investors will also dissect Powell’s press conference, along with updated projections for U.S. economic growth and inflation, for clues on how the central bank plans to navigate the months ahead.
