Gold prices held steady near a one-month low during Asian trading on Friday and were on track for weekly losses following the U.S. Federal Reserve’s forecast of fewer interest rate cuts than anticipated in 2025, which unsettled investors.
While the Fed lowered interest rates by 25 basis points as expected, it indicated a slower pace of rate cuts, projecting only two reductions in 2025. This contrasted with market expectations of four cuts prior to the announcement.
Spot gold edged up to $2,596.82 per ounce, and gold futures for February delivery rose 0.1% to $2,610.30 an ounce by 22:35 ET (03:35 GMT).
Despite these gains, spot prices were down nearly 2% for the week, pressured by a strong dollar, which surged to its highest level in over a year during the week.
Hawkish Fed outlook weighs on gold, PCE data in focus
Gold prices hit a one-month low on Wednesday after the Fed signaled that interest rates would remain elevated for an extended period following the rate cut.
Higher rates tend to weigh on gold, increasing the opportunity cost of holding the non-yielding asset and making it less appealing compared to interest-bearing instruments like bonds.
Traders are now pricing in only a single quarter-point rate cut in 2025, reflecting ongoing economic resilience and persistent inflationary pressures.
Economic data released this week further reinforced the Fed’s stance. Revised figures for third-quarter gross domestic product showed the U.S. economy grew at a faster pace than initially estimated. Additionally, initial jobless claims fell more than expected last week, pointing to a gradual cooling of the labor market.The ongoing resilience of the U.S. economy could diminish demand for safe-haven assets, further weighing on bullion’s outlook.
Investors are now focused on the upcoming release of the PCE price index, the Federal Reserve’s preferred inflation measure, for additional insights into the U.S. economic trajectory.
Other precious metals decline
On Friday, other precious metals saw declines. Platinum futures fell 0.4% to $921.75 per ounce, while silver futures also dropped 0.4%, settling at $29.302 per ounce.
Copper gains on U.S. data and China stimulus expectations
In industrial metals, copper prices rebounded after Thursday’s decline, buoyed by strong U.S. economic data that raised hopes for improved demand.
Optimism around increased fiscal spending in China further supported copper. Recent reports indicate that Beijing plans to ramp up fiscal stimulus in the coming year. Meanwhile, the People’s Bank of China kept its benchmark loan prime rate unchanged on Friday, as past efforts to loosen monetary policy have provided limited economic support.
Benchmark copper futures on the London Metal Exchange climbed 0.4% to $8,925.30 per ton, while one-month copper futures remained steady at $4.0855 per pound.
