Gold prices remained subdued near weekly lows during Wednesday’s Asian trading session, as caution prevailed ahead of the highly anticipated Federal Reserve policy decision and Chair Jerome Powell’s press conference.
By 3:05 pm AEDT (4:05 am GMT) spot gold was down by $2.18 or 0.1% to US$2,644.81 per ounce.
The precious metal has struggled to maintain bullish momentum this week, falling to a six-day low of $2,633 on Tuesday. Persistent buying in U.S. Treasury bonds, driven by expectations that the Federal Reserve may pause its easing cycle earlier than anticipated, weighed heavily on gold prices.
This sentiment was bolstered by robust U.S. retail sales data for November, which exceeded expectations with a 0.7% increase, compared to the forecasted 0.5% rise.
While U.S. Treasury yields initially climbed on the data, they later retreated as risk sentiment soured across global markets. The cautious mood helped gold recover slightly, closing above $2,640 on Tuesday.
As of Wednesday, traders remained risk-averse, with gold prices oscillating within a narrow range. The next significant move in gold prices will depend heavily on the Federal Reserve’s policy statement, its Summary of Economic Projections (SEP), and Powell’s subsequent remarks.
If the SEP, particularly the dot-plot, signals fewer rate cuts in 2025 than previously projected, the U.S. dollar could rally further, exerting additional downward pressure on the non-yielding gold.
Powell’s comments will also be closely watched for any hints about the timing of the next rate cut, especially in the context of ongoing inflation concerns.