Gold prices steady amid caution ahead of Fed meeting

Gold prices steadied in Asian trade on Tuesday, as metal markets hunkered down before a U.S. Federal Reserve meeting this week, where the central bank is likely to cut interest rates further.

The yellow metal logged some weakness so far in December, but was sitting on four straight months of outsized gains on cheer over lower U.S. interest rates. Broader metal prices were also mostly flat on Tuesday, while silver hovered near record highs after sharp gains in the past week.

Spot gold fell 0.1% to $4,186.18 an ounce, while gold futures for February fell slightly to $4,215.40/oz by 00:04 ET (05:04 GMT).

Fed rate cut largely priced in, outlook uncertain
The Fed is widely expected to cut interest rates by 25 basis points at the conclusion of a two-day meeting on Wednesday.

Bets on a cut were furthered by data late last week showing PCE price index– the Fed’s preferred inflation gauge– cooled slightly in September.

But OCBC analysts noted that the prospect of a “hawkish hold” by the Fed were growing in recent weeks, especially given that the central bank will lack crucial economic readings for October and November, going into the meeting.

Still, the prospect of lower rates boosted gold prices in recent months, as an outlook of lower returns on U.S. debt boosted plays into non-yielding assets.

Broader precious metal prices were flat on Tuesday, but were also sitting on strong gains in recent sessions. Spot platinum steadied at $1,651.81/oz, while silver prices were major outperformers in recent sessions.