By Daksh Grover
(Reuters) – Gold eased on Tuesday, pressured by a firmer U.S. dollar and Treasury yields, as investors looked ahead to the Federal Reserve’s interest rate decision amid expectations it will adopt a cautious approach to monetary policy easing next year.
Spot gold was down 0.5% at $2,639.22 per ounce, as of 1055 GMT. U.S. gold futures shed 0.6% to $2,654.10.
The dollar and benchmark U.S. 10-year Treasury yields rose ahead of the Fed’s final policy meeting of the year starting later in the day. [USD/] [US/]
While a widely anticipated quarter point interest rate cut is expected on Wednesday, traders are increasingly convinced the central bank will lower borrowing rates only gradually next year.
According to CME’s FedWatch tool, the odds of a 25 bps cut this week stand at 97%, but the chances of a reduction in January are just around 17%.
“Gold traders are apparently reluctant to make sizeable moves just yet, given that the pivotal FOMC (Federal Open Market Committee) rate decision is just around the corner,” said Exinity Group Chief Market Analyst Han Tan.
The Fed meeting will provide insights for future rate cuts in 2025 and 2026, and whether the central bank will scale back easing due to potential inflation under the incoming Trump administration.
If the Fed delivers a hawkish message and signals an imminent pause in policy easing, gold could drop to $2,600, with the 50-day moving average providing potential support, Tan said.
Bullion generally thrives in a low-interest rate environment.
Traders are also watching out for key U.S. GDP and inflation figures due later in the week, which may impact market sentiment.
Meanwhile, major consumer India’s gold imports are poised for a sharp slowdown in December following record purchases in November, trade and government officials said.
In other metals, spot silver was down 1.1% to $30.20 per ounce, platinum shed 1.2% to $924.58, and palladium fell 1.2% to $935.25.
(Reporting by Daksh Grover in Bengaluru; additional reporting by Swati Verma Editing by Susan Fenton)
