Gold Prices Steady Near One-Month Low

Gold prices steadied near a one-month low in Asian trade on Friday, heading for weekly losses after the U.S. Federal Reserve’s forecast of fewer interest rate cuts in 2025 put investors on edge.

The Fed lowered interest rates by 25 basis points as expected but signaled a slower rate cut path with only two more cuts anticipated in 2025, while markets were expecting four cuts before the decision.

Spot gold was slightly higher at $2,596.82 per ounce, while February gold futures ticked up 0.1% to $2,610.30 an ounce by 22:35 ET (03:35 GMT). Spot prices were down nearly 2% this week, facing pressure from a strong dollar, which surged to an over one-year high.

Hawkish Fed Outlook Dents Gold, PCE Data Awaited

Gold prices hit a one-month low on Wednesday after the Fed indicated that rates would remain higher for a longer period following Wednesday’s cut. Higher interest rates exert downward pressure on gold as they increase the opportunity cost of holding gold, making it less attractive compared to interest-bearing assets like bonds.

Traders are now anticipating only a single quarter-point reduction in 2025 amidst continued economic resilience and elevated inflation. GDP data released on Thursday supported the Fed’s outlook, indicating the U.S. economy grew faster than previously estimated in the third quarter. Additionally, initial jobless claims fell more than expected last week, suggesting a gradual labor market slowdown.

The ongoing resilience of the U.S. economy could reduce the demand for safe-haven assets, further dampening the prospects for bullion. Investors are awaiting the release of PCE price index data, the Fed's preferred inflation gauge, to gain more insight into the U.S. economic outlook.

Other precious metals were weaker on Friday. Platinum futures fell 0.4% to $921.75 an ounce, while silver futures also lost 0.4% to $29.302 an ounce.

Copper Rises on U.S. Data, China Stimulus Hopes

Among industrial metals, copper prices rebounded after Thursday's slump, driven by strong U.S. economic data that boosted hopes of improved copper demand. Anticipation of increased fiscal spending in China also supported copper, with reports suggesting Beijing will ramp up fiscal stimulus in the coming year. The People's Bank of China left its benchmark loan prime rate unchanged on Friday, as looser monetary conditions have provided limited support to the economy in the past two years.

Benchmark copper futures on the London Metal Exchange rose 0.4% to $8,925.30 a ton, while one-month copper futures remained steady at $4.0855 a pound.