Gold Futures Settle Slightly Down Ahead Of Fed Rate Decision

Gold futures ended slightly down on Tuesday despite the dollar’s weakness ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is widely expected to hold rates tomorrow, with the spotlight squarely on the central bank’s dot plot and summary economic projections as well as comments from Chair Jerome Powell during his press conference.

The dollar index, which dropped to 103.49 after the release of the inflation report, recovered to 104.10 around late morning, but drifted down to 103.87 later, recording a loss of about 0.22%.

Gold futures for February ended down $0.50 at $1,993.20 an ounce.

Silver futures for March ended lower by $0.042 at $22.906 an ounce, while Copper futures for March settled at $3.7875 per pound, gaining $0.0070.

The Labor Department’s data today said the consumer price index crept up by 0.1% in November after coming in unchanged in October. The uptick matched expectations.

Excluding food and energy prices, core consumer prices rose by 0.3% in November after edging up by 0.2% in October. The increase in core prices also came in line with estimates.

The report also said the annual rate of consumer price growth slipped to 3.1% in November from 3.2% in October, while the annual rate of core consumer price growth was unchanged at 4%.

Today’s inflation data has added to optimism about the outlook for interest rates ahead of the central bank’s monetary policy announcement on Wednesday.

Data on producer price inflation along with reports on retail sales and industrial production will be in focus later in the week after last Friday’s strong than expected jobs data forced traders to lower bets for U.S. rate cuts to May from March 2024.

The European Central Bank (ECB), Bank of England (BoE), Norges Bank and the Swiss National Bank are all scheduled to announce their monetary policy decisions on Thursday.

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