Gold remains stable as investors anticipate the Fed's decision

13 Dec 2023 , 09:15 AM

Early on Wednesday morning in Asia, gold prices remained mostly unchanged as investors braced themselves for the U.S. Federal Reserve’s announcement about interest rates and its policy outlook later in the day.

Spot gold was unchanged at $1,980.58 an ounce. US gold futures increased by 0.1% to $1,995.80.

The Fed’s policy committee responsible for determining interest rates will deliver its policy statement. Chair Jerome Powell will then hold a press conference at 1930 GMT.

In light of expectations for rate decreases in the first half of 2024, investors will be watching for remarks from Powell that could provide additional insight into the Fed’s monetary policy outlook.

The CME FedWatch Tool indicates that traders are pricing in a roughly 75% possibility of a rate drop in May and generally anticipate the Fed to keep rates unchanged at 5.25%–5.50% this week.

Since gold doesn’t pay interest, it usually gains when interest rates decline since storing bullion has less opportunity cost.

After being constant in October, the U.S. consumer price index (CPI) increased by 0.1% last month, according to data released on Tuesday by the Labour Department’s Bureau of Labour Statistics. The CPI grew 3.1% in the 12 months ending in November, following a 3.2% gain in October.

On Thursday, investors were also anticipating the policy meetings of the Bank of England and the European Central Bank.

In the meantime, the dollar index continued to lag behind significant competitors, lowering the price of gold for holders of other currencies.

The largest exchange-traded fund backed by gold in the world, SPDR Gold Trust, reported that its holdings decreased by 0.33% to 875.65 tonnes on Tuesday from 878.54 tonnes on Monday.

Spot silver was unchanged at $22.74 an ounce, while palladium dropped 0.2% to $977.21 and platinum dipped 0.3% to $926.68.

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