Gold Prices Edge Higher as Investors Remain Cautious Amid Hawkish Fed Outlook
Gold prices inched up 0.2% to $2,616.95 per ounce on Tuesday, extending their tepid performance as investors remained cautious following the US Federal Reserve’s hawkish tilt. The yellow metal had lost more than 1% in the previous week, reflecting uncertainty about its outlook.
Traders refrained from placing large bets ahead of a shortened trading week due to the Christmas holiday. The Fed’s rate outlook has put downward pressure on gold, as higher interest rates make it more attractive to hold interest-bearing assets like bonds. Analysts expect only two quarter-point reductions in 2025 amid continued economic resilience and still-elevated inflation.
The strong dollar, which rose 0.1% in Asia hours on Tuesday and hovered near a two-year high, also weighed on gold prices. A stronger dollar makes the yellow metal more expensive for buyers using other currencies. Other precious metals were largely muted, with silver inched up 1.2% to $960.15 an ounce and platinum gained 0.3% to $30.265 an ounce.
Copper prices were subdued and moved within tight ranges on Tuesday, attributed to seasonal sluggishness and a strong greenback. Industrial production and construction projects often slow down as businesses and projects prepare for year-end closures and holidays.