Gold price today, gold held a two-day drop ahead of the Fed rate cut decision of the year, with traders also weighing the policy outlook for 2025.
 

Gold Prices Fluctuate Amid Fed Rate Expectations

Gold traded at approximately $2,652 an ounce, after experiencing a 2.6% decline over the past two sessions due to mixed U.S. economic data, including rising wholesale inflation and higher-than-expected jobless claims.

The Federal Reserve is anticipated to cut interest rates by 25 basis points in its upcoming meeting on Wednesday, with swaps traders pricing in a total of three quarter-point reductions over the next year. Lower interest rates are generally favorable for gold, as it does not yield interest.

So far this year, gold has surged about 29%, positioning it for its largest annual gain since 2010. This remarkable performance has been driven by Fed easing, increased safe-haven demand, and ongoing purchases by central banks worldwide.

Looking ahead, the World Gold Council predicts that price increases may slow in 2025 due to factors such as economic growth and inflation.

As of 7:15 a.m. in London, spot gold was up 0.2% at $2,652.80 an ounce. The Bloomberg Dollar Spot Index dipped 0.1% after rising 0.8% last week. Silver and palladium saw little change, while platinum decreased by 0.4%.
 

Gold Prices Draw Attractions Amid Geopolitical Tensions

Gold prices are seeing some inflows as safe haven demand rises amid ongoing geopolitical risks, though potential for significant upside appears limited.

Israel's recent decision to allocate state funds to expand its presence and double its population in the Golan Heights raises concerns about escalating tensions in the region. Israeli airstrikes in Gaza have reportedly killed at least 53 Palestinians, with the military claiming to have targeted militants in the enclave.

NATO Secretary General Mark Rutte has warned that Russian President Vladimir Putin aims to erase Ukraine and may threaten other parts of Europe. Additionally, Israeli fighter jets have targeted missile launchers and conducted airstrikes on radar installations in southern and eastern Syria, respectively.

In financial news, the CME Group's FedWatch Tool shows that traders are anticipating over a 93% chance of a 25 basis point cut in borrowing costs by the Federal Reserve on Wednesday. Last week's Consumer Price Index (CPI) and Producer Price Index (PPI) data reinforced expectations that the Fed may slow its rate-cutting cycle next year.

The yield on the benchmark 10-year U.S. government bond reached a three-week high on Friday, reflecting bets on a less dovish Fed, which could limit gains for non-yielding gold.

Looking ahead, Monday's economic calendar includes the release of global flash PMIs, which could influence broader market risk sentiment and impact demand for gold. However, the main focus will be on the crucial Federal Open Market Committee (FOMC) decision on Wednesday, with traders closely monitoring the accompanying policy statement and remarks from Fed Chair Jerome Powell.