Gold Prices Steady in Asia Amid Fed Policy Meeting

Gold prices held steady in Asian trade on Wednesday following a decline in the previous session. This stabilization comes as the Federal Reserve starts its December policy meeting, which is anticipated to conclude with a rate cut.

Despite the expected reduction, there remains concern regarding the longer-term interest rate outlook in the U.S. The Fed is likely to implement more gradual cuts next year after the conclusion of this two-day meeting.

As of 22:51 ET (03:51 GMT), spot gold remained largely unchanged at $2,646.10 per ounce. Gold futures for February experienced a slight decrease, trading at $2,660.72 per ounce.

Gold Under Pressure from Slower Rate Cut Expectations in 2025

A 25 basis point rate cut is widely anticipated, but the focus will likely be on future economic projections from the Fed and comments from Chair Jerome Powell.

Concerns about the Fed’s long-term rate outlook remain a priority, especially with persistent inflation expected to rise under the upcoming administration of President Donald Trump. Unlike interest-earning assets such as bonds or savings accounts, gold does not provide income, making it less attractive when interest rates rise. Higher rates typically increase the dollar's strength, evident as the US Dollar Index remains near a three-week high, further adding pressure to gold prices, since gold is dollar-priced and becomes more expensive for foreign investors.

A stronger economy often equates to reduced demand for gold as a safe-haven asset.

In addition to the Fed, the Bank of Japan and the Bank of England are also set to announce rate decisions this week. The BOE is expected to maintain current rates, while speculation continues about potential rate hikes from the BOJ.

Other precious metals also exhibited slight decreases, with platinum futures dropping 0.1% to $942.20 per ounce and silver futures falling 0.3% to $30.845 per ounce.

Copper Prices Decline Amid Concerns Over China Demand

In the realm of industrial metals, copper prices fell on Wednesday, driven by recent data showcasing weakening consumption in China, the world's largest copper consumer, amid challenges in its property sector.

Benchmark copper futures traded on the London Metal Exchange decreased by 0.4% to $8,973.50 per ton, while one-month copper futures dropped 0.5% to $4.1255 per pound.

This decline occurred despite expectations of relaxed monetary policies and increased fiscal spending in China. Reports suggest Beijing will raise its budget deficit to 4% of GDP in 2025, the highest on record, while also targeting 5% GDP growth for a third consecutive year.