Gold firms ahead of Fed rate decision

Gold prices firmed on Wednesday as investors held back from taking big positions ahead of the Federal Reserve‘s upcoming monetary policy decision.

FUNDAMENTALS

* Spot gold ticked up 0.1% to $2,649.09 per ounce, as of 0044 GMT. U.S. gold futures added 0.1% to $2,665.40.

* The Fed started its two-day policy meeting on Tuesday and attention is on the Fed’s updated economic projections and the dot plot, which could reshape expectations for the rate trajectory through 2025 and 2026.

* U.S. retail sales increased more than expected in November, adding to warmer inflation readings in recent months and suggesting that the Fed could pause rate cuts in January. * Markets see a 97.1% chance of a quarter-point rate cut but have only priced in a roughly 16.3% chance of another reduction in January, according to CME’s FedWatch tool.
* On the policy front, the Bank of Japan, Bank of England, Riksbank and Norges Bank are expected to deliver their policy verdicts later this week.
* Chile’s central bank cut its benchmark interest rate by 25 basis points to 5.00% on Tuesday, extending an easing cycle that began last year while also warning of inflation risks in the short term.
* Non-yielding gold tends to do well in a low-interest-rate environment.

* Traders are also watching out for key U.S. GDP and inflation data due later this week for further cues.

* Meanwhile, India’s gold imports are poised for a sharp slowdown in December following record purchases in November, in the absence of any major festival and as rebounding prices prompt buyers to delay purchases, trade and government officials said.

* Spot silver was unchanged at $30.51 per ounce, platinum shed 0.2% to $937.79, while palladium gained 0.3% to $937.87.

DATA/EVENTS (GMT) 0700 UK Core CPI YY, CPI YY, CPI Services MM, CPI Services YY Nov 1000 EU HICP Final MM, HICP Final YY Nov 1330 US Housing Starts Number Nov.