Spot Gold held just below the $4,200 mark on Tuesday, as investors braced for the outcome of the Federal Reserve’s two-day policy meeting.
The Fed is widely expected to lower its federal funds rate target range by 25 basis points to 3.50%-3.75% at its December meeting.
The Federal Reserve cut interest rates by 25 basis points to 3.75%-4.00% in October, bringing borrowing costs to their lowest level since 2022.
Fed policy makers highlighted increasing downside risks to employment in recent months, while inflation has remained elevated.
The minutes from the Federal Reserve’s October meeting revealed that interest rates had been lowered even as policy makers cautioned that such a move could risk entrenched inflation and a loss of public trust in the financial institution.
Investors will also be paying close attention to the press conference with Fed Chair Jerome Powell for clues over the timing of future interest rate cuts as well as to the new set of FOMC economic forecasts.
Markets are now pricing in two additional interest rate cuts by the end of 2026.
Lower interest rates tend to reduce the opportunity cost of holding Gold, which pays no interest.
Spot Gold was last down 0.17% on the day to trade at $4,183.56 per troy ounce.
Strong central bank buying, US tariff policies, potential rate cuts by the Federal Reserve, robust ETF inflows and geopolitical uncertainty have fueled Gold’s rally to a series of record highs this year. Its current all-time high stands at $4,381.21/oz.
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