Gold Prices Dip Slightly but Hold Near Record Highs Ahead of Fed Decision

Gold prices edged lower in Asian trade on Tuesday, but remained near record highs as expectations grew for a substantial interest rate cut by the U.S. Federal Reserve later this week. The metal’s strong performance has been fueled by a weakening U.S. dollar and falling Treasury yields, driven by speculation of an aggressive rate reduction.

Gold Near Record Highs Amid Rate Cut Expectations

Spot gold fell 0.2% to $2,578.03 per ounce, while December gold futures declined 0.1% to $2,605.05 an ounce by 03:56 GMT. The slight pullback follows a record high of $2,589.69 reached on Monday, as traders priced in a 50 basis point (bps) cut at the conclusion of the Fed’s two-day meeting on Wednesday. According to CME Fedwatch, there is a 68% probability of a 50 bps cut, with a 32% chance of a smaller 25 bps reduction.

Gold Gains on Anticipated Easing Cycle

Gold, which benefits from lower interest rates as they reduce the opportunity cost of holding non-yielding assets, has outperformed other precious metals this year. The anticipated start of a Fed easing cycle could see rates fall by over 100 bps by the end of the year, further supporting gold prices.

In addition to rate cut speculation, gold has gained from central bank purchases, particularly in emerging markets, adding to its appeal as a safe-haven asset.

Other Precious Metals See Modest Gains

Platinum futures rose 0.2% to $990.50 an ounce, while silver futures remained steady at $31.145 an ounce. Both metals have seen gains, but gold has consistently outpaced other precious metals due to broader safe-haven demand and supportive macroeconomic conditions.

As markets await the Fed’s decision, gold’s upward trajectory remains a focal point for investors seeking shelter from ongoing economic uncertainty.