Gold prices muted before Fed rate decision; dollar in spotlight

Investing.com -- Gold prices were little moved Monday as traders cautiously awaited the final Federal Reserve policy meeting of the year, given it has the potential to move the dollar, which has been in demand. 

At 09:15 ET (15:15 GMT), Spot gold rose 0.2% to $2,652.99 an ounce, while gold futures expiring in February fell 0.1% to $2,671.89 an ounce. 

Among industrial metals, copper prices were also pressured by a strong dollar, with mixed economic readings from China doing little to inspire confidence in demand. 

Gold saw some bids last week on the prospect of lower US interest rates in the near-term. But this was offset by uncertainty over the long-term outlook for rates, which the Fed is likely to elaborate on this week. Gold under pressure as Fed meeting looms 

Traders remained wary of the yellow metal before the Fed meeting this week. The central bank is widely expected to cut rates by 25 basis points at the conclusion of the meeting on Wednesday, bringing rates down by a total 100 bps in 2024. 

But the central bank’s outlook on rates will be closely watched, especially in light of recent data showing inflation grew stickier in November, while the labor market remained strong. 

The Fed is expected to signal more caution over future easing, which could keep rates high in the long-term. 

High rates bode poorly for gold and other non-yielding assets, given that they increase the opportunity cost of investing in the yellow metal. The dollar firmed on this notion, pressuring gold prices through the past week.

Still, analysts at ANZ said they remained bullish on gold, forecasting spot prices at $2,900 an ounce in 2025. While gains are expected to moderate in the coming year, high economic and geopolitical risks are still expected to keep safe haven demand in play.

Other precious metals edged slightly higher Monday. Platinum futures gained 2.2% to $944.50 an ounce, while silver futures rose 0.1% to $31.043 an ounce.  Copper struggles for direction after Chinese data  

Benchmark copper futures on the London Metal Exchange rose 0.1% to $9,072.0 a ton, while February copper futures fell 0.2% to $4.1907 a pound. 

The red metal struggled for direction after data on Monday painted a mixed picture of the Chinese economy. While industrial production grew as expected in November, retail sales growth slowed sharply, while fixed asset investment growth disappointed. 

The readings came as a recent top-level political meeting in the country yielded scant cues on Beijing’s plans for more stimulus.

China is the world’s biggest copper importer, with concerns over slowing demand, amid a weakening economy, being a major weight on copper prices.

(Ambar Warrick contributed to is article.)

Source: Investing.com