By Brijesh Patel and Sherin Elizabeth Varghese
(Reuters) – Gold slipped more than 1% to a one-month low on Wednesday after the U.S. Federal Reserve lowered interest rates as expected, but noted it will slow the pace at which borrowing costs fall any further, boosting the dollar and Treasury yields.
U.S. central bankers issued fresh projections calling for two quarter-point interest-rate cuts next year amid rising inflation, a forecast consistent with a wait-and-see approach come January as Donald Trump takes the White House.
Spot gold was down 1.5% at $2,606.64 per ounce by 02:56 p.m. ET (1956 GMT), its lowest since Nov. 18. U.S. gold futures settled 0.3% down at $2,653.30.
“Markets are struggling to digest just two cuts projected for next year; gold is lower but still in the fight. Bulls would be pleased if gold can hold above $2,600,” said Tai Wong, an independent metals trader.
Futures on the federal funds rate have priced in that the overnight benchmark rates will remain unchanged at the Fed’s January policy meeting. Higher rates reduce the appeal of holding the non-yielding asset.
Following the Fed verdict, the dollar extended gains, making gold more expensive for other currency holders, while the benchmark U.S. 10-year yield hit a fresh four-week high. [USD/] [US/]
Fed Chair Jerome Powell said that Fed policymakers want to see more progress on bringing inflation down as they consider the path of future rate cuts.
Traders now will be watching out for key U.S. GDP and inflation data due later this week that could further shape expectations around monetary policy.
“I do see the consolidation as a continuation pattern within the longer-term uptrend in gold. I think that trend will re-exert itself in the first quarter of 2025,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Elsewhere, spot silver fell 2.3% to $29.83 per ounce, platinum slipped 1.8% to $922, while palladium declined 2.5% to $910.94.
(Reporting by Brijesh Patel and Sherin Elizabeth Varghese in Bengaluru; Editing by Alexander Smith and Shreya Biswas)
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