Gold prices slipped during early Asian trading hours on Monday as the dollar strengthened, with investors closely monitoring the U.S. Federal Reserve's first meeting of 2025 for guidance on interest rate decisions.
Key Highlights:
- Spot Gold: Declined 0.1% to $2,768.01 per ounce as of 0046 GMT.
- U.S. Gold Futures: Dropped 0.2% to $2,772.70 per ounce.
- Dollar Index: Rose 0.2%, increasing the cost of gold for foreign buyers.
Federal Reserve Outlook:
- Fed policymakers are anticipated to maintain the current interest rate range of 4.25%-4.50% during the Jan. 28-29 meeting.
- Attention centers on how the Fed will navigate economic changes shaped by early moves from President Donald Trump, including calls for continued rate cuts.
- Last year, the Fed reduced its benchmark rate by a full percentage point.
Economic Context:
- Data since the Dec. 17-18 Fed meeting suggests inflation remains on a slow but steady path toward the 2% target, supported by low unemployment and consistent economic growth.
- Gold's status as an inflation hedge may face challenges if Trump's perceived inflationary policies prompt the Fed to keep rates higher for an extended period.
Geopolitical Developments:
- President Trump announced on Sunday plans for retaliatory tariffs and sanctions against Colombia after the country barred two U.S. military aircraft carrying deported migrants.
Market Activity:
- SPDR Gold Trust: Holdings fell by 0.47%, from 864.19 metric tons on Thursday to 860.17 tons on Friday.
- COMEX Speculators: Increased net long positions by 21,864 contracts, reaching 234,358 in the week ending Jan. 21.
Other Precious Metals:
- Silver: Dropped 0.3% to $30.52 per ounce.
- Palladium: Declined 0.8% to $979.72 per ounce.
- Platinum: Fell 0.4% to $945.20 per ounce.
Upcoming Data and Events (GMT):
- 0130: China NBS Manufacturing PMI (Jan)
- 0500: Japan Leading Indicator Revised (Nov)
- 0900: Germany Ifo Business Climate, Current Conditions, and Expectations (Jan)
- 1100: France Unemployment Class-A SA (Dec)
- 1500: U.S. New Home Sales-Units (Dec)