Gold Prices Edge Higher Amid Cautious Trading

Investing.com—Gold prices edged higher in Asian trade on Tuesday, extending their tepid performance as investors remained cautious due to the rising dollar following the U.S. Federal Reserve’s hawkish stance.

Traders also refrained from making large bets ahead of a shortened trading week due to the Christmas holiday.

Current Gold Prices

• Spot Gold: Up 0.2% to $2,617.22 per ounce
• February Gold Futures: Up 0.1% to $2,631.89 per ounce (21:46 ET / 02:46 GMT)

The yellow metal rose 0.3% on Monday after losing more than 1% in the previous week, indicating uncertainty about its outlook.

Bullion Under Pressure from Fed Rate Outlook

Gold prices fell to a one-month low on Wednesday after the Fed meeting indicated that rates would remain higher for an extended period. Prices have struggled to recover as investors assess the Fed's rate outlook.
Higher interest rates put downward pressure on gold, as the opportunity cost of holding it rises, making it less attractive compared to interest-bearing assets like bonds.

Traders now expect only two quarter-point rate reductions in 2025 amid ongoing economic resilience and elevated inflation, in comparison to previous expectations of four cuts before the Fed meeting.

Strong Dollar Creates Downward Pressure

The Fed’s hawkish shift bolstered the U.S. dollar, with higher interest rates making dollar-denominated assets more appealing. The U.S. Dollar Index rose 0.1% during Asian hours on Tuesday, hovering near a two-year high reached last week.

A stronger dollar typically weighs on gold prices by making the metal more expensive for buyers using other currencies.

Other precious metals saw muted movement:
– Platinum Futures: Up 0.1% to $951.90 an ounce
– Silver Futures: Gained 0.2% to $30.062 an ounce

Copper Subdued Amid Strong Dollar and Seasonal Factors

In industrial metals, copper prices remained subdued within tight ranges on Tuesday, influenced by a strong dollar. Analysts noted seasonal sluggishness, as industrial production and construction often slow down during year-end closures and holidays.

Benchmark Copper Futures on the London Metal Exchange were largely unchanged at $8,940.50 a ton, with one-month Copper Futures steady at $4.0905 a pound.