Gold retreats as traders see slower Fed rate cuts in 2025
Gold slipped on Tuesday under pressure from a strengthening U.S. dollar and climbing Treasury yields as investors focused on the Federal Reserve's final policy meeting of the year with growing expectations of a gradual pace of rate cuts in 2025.
Spot gold was down 0.2% at $2,647.81 per ounce, as of 01:41 p.m. ET (1841 GMT). U.S. gold futures settled 0.3% lower at $2,662.
The dollar (.DXY), opens new tab rose 0.1%, making gold pricier for holders of other currencies, while U.S. 10-year Treasury yields hovered near a four-week high hit earlier in the session, ahead of the Fed's meeting, where a 25 basis-point rate cut is widely expected on Wednesday.
Attention is also on the Fed's updated economic projections and the dot plot, which could reshape expectations for the rate trajectory through 2025 and 2026.
"So the question is, if the Fed going to be more hawkish or more dovish than what the markets are expecting right now. Because of Trump's agenda, people are expecting the Fed to be more cautious in terms of being open to further rate cuts at this stage," said Fawad Razaqzada, market analyst at Forex.com.
According to CME's FedWatch tool, the odds of a 25-basis-point rate cut this week stand at 95%, but the chances of a reduction in January are just around 16%.
Traders are also eyeing key U.S. GDP and inflation data later this week for further cues.
In other metals, spot silver was down 0.1% at $30.51 per ounce, platinum shed 0.3% to $938.48, and palladium fell 1.2% to $935.39.
Source: Reuters
