Having recorded its steepest single-day loss since October 21st on Monday, Spot Gold staged a recovery on Tuesday, but remained close to a two-week low of $4,302.11/oz..
Yesterday Gold retreated 4.4%, pulling back from last week’s all-time high of $4,549.71/oz. amid a substantial year-end profit booking.
Gold has had a notable rally so far this year due to a combination of factors such as strong central bank buying, US tariff policies, potential rate cuts by the Federal Reserve, robust ETF inflows and geopolitical uncertainty.
Year-to-date, the yellow metal has surged 66.60%, set to register its best annual performance since 1979.
FOMC policy makers signaled just one 25 bps rate cut for next year, while investors continue to expect two or three rate cuts of 25 basis points each. Markets are now pricing in about a 50% chance for the first cut to occur in March.
Lower interest rates tend to reduce the opportunity cost of holding Gold, which pays no interest.
Investor focus now sets on the minutes from the Federal Reserve’s December meeting, to be published later in the day, which may provide clues over monetary policy trajectory.
The Fed lowered its federal funds rate target range by 25 basis points to 3.50%-3.75% at its December meeting. But, the vote was divided, as three FOMC members continued to vote against the rate reduction.
Fed Chair Jerome Powell has not offered any guidance on the timing of the next rate cut.
Spot Gold was last up 0.91% on the day to trade at $4,371.95 per troy ounce.
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