Gold Prices Steady Amid Dollar Strength and Fed Meeting

Gold prices steadied in Asian trade on Friday after logging steep losses in the prior session due to the strength of the dollar, with anticipation of next week’s Federal Reserve meeting favoring the greenback.

Despite this, the yellow metal retained a significant portion of its gains for the week, as safe haven demand was bolstered by heightened geopolitical tensions in the Middle East and Asia.

Spot gold steadied at $2,687.44 an ounce, while gold futures expiring in February remained flat at $2,709.51 an ounce by 00:00 ET (05:00 GMT). Notably, spot prices were trading up over 2% this week.

Gold Pressured by Dollar Strength as Fed Meeting Looms

The yellow metal tapered some of its gains this week as the dollar firmed ahead of the Fed meeting. The central bank is widely expected to cut rates by 25 basis points, although market uncertainty regarding its long-term plans persist, particularly as this week’s data indicated U.S. inflation remained stubbornly high.

Predictions suggest that the Fed will adopt a slower pace of rate cuts in 2025 after reducing rates by 75 basis points in 2024. It’s also anticipated that expansionary and inflationary policies under incoming President Donald Trump will keep rates elevated long-term.

High rates typically exert downward pressure on metal prices due to increased opportunity costs associated with investing in non-yielding assets. Despite gold hitting a series of record highs this year amid rate cuts, the momentum of its gains has decelerated in recent months.

In addition to the Fed, interest rate decisions in Japan and England will also be focal points next week.

Other precious metals saw declines on Friday after previous losses, with platinum futures slipping 0.2% to $938.50 an ounce and silver futures dropping 0.7% to $31.405 an ounce.

Copper Prices Fall as China CEWC Underwhelms

In the realm of industrial metals, copper prices fell on Friday, continuing a pullback from Thursday's session as traders expressed disappointment with the signals regarding stimulus from a pivotal economic conference in China.

Benchmark copper futures on the London Metal Exchange steadied at $9,093.50 a ton, while February copper futures decreased 0.4% to $4.2270 a pound.

China’s Central Economic Work Conference (CEWC)—a crucial meeting involving government officials—revealed limited information about the country's plans to implement further stimulus and support its economy.

Expectations for the CEWC were high after signals from China’s Politburo earlier in the week leaned dovishly, but the conference ultimately did not clarify any promising measures.