Gold Prices Decline

Gold prices eased on Tuesday after reaching an all-time high in the previous session. The decline came as the U.S. dollar and Treasury yields firmed up, and traders prepared for the Federal Reserve’s interest rate decision later this week.

Current Gold Rates

• Spot Gold: Fell by 0.5% to $2,569.43 per ounce, down from its record high of $2,589.59 on Monday.
• U.S. Gold Futures: Closed 0.6% lower at $2,592.40 per ounce.

Focus on Federal Reserve’s Meeting

The financial spotlight is on the Federal Reserve’s two-day policy meeting, concluding on Wednesday. Markets are currently anticipating a 63% chance of a 50-basis-point rate cut, up from 34% a week ago, according to the CME FedWatch tool. This would mark the Fed’s first rate cut since 2020.

Market Reactions and Predictions

Bart Melek, head of commodity strategies at TD Securities, noted that the gold market is trending lower due to rising yields across the curve. Concerns exist that a smaller rate cut could diminish the incentive to buy gold.

Goldman Sachs has predicted potential short-term declines in gold prices if the Fed opts for a 25 basis point cut. However, they maintain a long-term gold price target of $2,700 per ounce by early 2025.

Impact of Interest Rates

Lower interest rates typically decrease the opportunity cost of holding non-yielding gold. Ole Hansen, head of commodity strategy at Saxo Bank, suggested that reduced opportunity costs might boost demand for gold-backed ETFs, particularly in Western markets.

Other Precious Metals

• Spot Silver: Dropped 0.2% to $30.71 per ounce after reaching a two-month high on Monday.
• Platinum: Increased by 0.2% to $982.30 per ounce.
• Palladium: Rose by 3.5% to $1,113.94 per ounce.

Conclusion

Gold prices have retreated as financial markets anticipate the Federal Reserve’s decision on interest rates. The strengthening dollar and rising yields have led to a cautious outlook on gold, while other precious metals show mixed performance.