Gold prices traded within a narrow range on Tuesday as the U.S. dollar and long-term Treasury yields stabilised at multi-week highs, with investors closely watching the Federal Reserve’s interest rate decision and upcoming U.S. retail sales data.
By 3:55 pm AEDT (4:55 am GMT) spot gold eased $1.55 or 0.1% lower at US$2,650.9 per ounce.
The Federal Reserve begins its two-day monetary policy meeting later on Tuesday, with market participants expecting a 25-basis point interest rate cut.
The CME Group’s FedWatch Tool indicates full pricing of this move, though speculation about fewer rate cuts in 2025 and a potential pause in January is tempering bullish sentiment on gold.
Among data releases, the S&P Global Manufacturing PMI for December fell to 48.3, below the forecast of 49.8, deepening contraction in the sector.
Conversely, the Services PMI rose sharply to 58.5, surpassing November’s 56.1 and expectations of 55.7.
While geopolitical concerns provide underlying support for gold, including U.S. sanctions on North Korea and Russia as well as tensions in South Korea and the Israel-Gaza conflict, the upcoming Fed decision and economic projections remain key for market direction.
Traders are also awaiting November’s U.S. retail sales data, which could provide additional trading cues, though it is unlikely to shift expectations for the Fed’s move this week.