Gold steady as traders prepare for ‘hawkish’ tone from Fed

By Ishaan Arora

Bengaluru — Gold traded flat on Tuesday as investors had largely priced in a Federal Reserve rate cut, while bracing for signals that the US central bank may pursue a milder-than-expected easing cycle at its two-day policy meeting starting later in the day.

Spot gold held steady at $4,189.17/oz by 4.44am GMT. US gold futures for December delivery was flat at $4,218.50/oz.

Investors are largely repositioning ahead of the Federal Reserve’s policy meeting, Oanda senior market analyst Kelvin Wong said.

“Earlier in the month, Powell signalled hawkish rate-cut guidance during his press conference. So investors in the US treasury market are adjusting their positions.”

The benchmark US 10-year treasury yields held near a two-and-a-half-month peak hit on Monday.

Analysts widely expect a “hawkish cut” this week accompanied by guidance and forecasts that signal a high threshold for further easing into next year.

Last week, data showed the US personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, landed in line with expectations, while consumer sentiment improved in December.

Private payrolls for November recorded their sharpest drop in more than two-and-a-half years, but jobless claims fell to a three-year low for the week ended November 28.

Markets now assign an 89% probability of a quarter-point cut at the Fed’s December 9–10 meeting, according to CME’s FedWatch Tool.

Lower interest rates tend to favour nonyielding assets such as gold.

Meanwhile, silver rose 0.2% to $58.24/oz, not far from the record high of $59.32 hit on Friday.

“Right now, silver is more of a higher-beta play among precious metals,” Wong said, adding that low inventories, strong industrial demand, and expectations of Fed rate cuts are driving its momentum, pushing it into risk-on mode and outperforming gold.

Platinum gained 0.4% to $1,649.10, while palladium added 0.7% to $1,475.38.