Gold prices steady ahead of US Fed decision: Key factors driving the market and investment outlook – CNBC TV18
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In India, 24-carat gold is priced at ₹7,818.3 per gram, up by ₹130.
The 22-carat variety costs ₹7,168.3 per gram, reflecting an increase of ₹120.
Fed policy and gold market impact
The Fed’s two-day policy meeting, concluding today, holds significant implications for gold prices.
Key insights into the central bank’s updated economic projections and dot plot are expected to shape market sentiment. Analysts predict a 95.4% likelihood of a 25 basis-point rate cut today, but only a 16% chance of a reduction in January, according to the CME FedWatch Tool.
Matt Simpson, a senior analyst at City Index, stated, “If the Fed implies two cuts for next year, gold could benefit and see a pop higher.”
Higher-than-expected US retail sales in November, coupled with resilient consumer spending, suggest that the Fed may pause rate cuts in January.
This could weigh on gold, as rising bond yields, like the benchmark 10-year US Treasury yield hitting a one-month high, typically reduce gold’s appeal.
Global monetary policy and geopolitical tensions
Major central banks, including the Bank of England and the Bank of Japan, are also set to announce policy updates this week.
Meanwhile, geopolitical tensions escalated as Ukraine alleged the death of a top Russian military figure in a Moscow blast, raising concerns of further hostilities.
Renisha Chainani, Head of Research at Augmont – Gold For All, commented, “Gold prices could remain under pressure in the near term due to strong consumer spending and higher inflation, which supports a less dovish Fed stance.”
Gold price outlook and investment strategy
Gold is expected to trade between $2,650 per ounce (₹76,400 per 10 grams) and $2,750 per ounce (₹79,000 per 10 grams) in the coming days.
The metal often performs well in low-interest-rate environments. However, current conditions, including robust US economic data and higher bond yields, could cap significant price gains.
Non-yielding gold remains a preferred hedge against geopolitical risks and inflation, making it a long-term portfolio staple despite short-term fluctuations.
-With agencies inputs
