Gold prices fell on Friday but were still on track to finish the week higher as attention turned to the U.S. Federal Reserve’s December policy meeting at which it is widely expected to deliver its third interest rate cut this year.
Spot gold was down 0.4% at $2,671.39 per ounce at 1257 GMT, as the U.S. dollar hovered near its highest in more than two weeks. U.S. gold futures fell 0.6% to $2,692.40.
Bullion is still up more than 1% so far this week after a bout of profit-taking was triggered when prices hit a five-week high on Thursday.
“We have reached the time of year when convictions are low, and positions are being held on a short leash, meaning any price reversal – in both directions – will quickly be met with position-squaring,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Gold is expected to consolidate through year-end before resuming its upward trajectory in 2025, potentially reaching the $3,000 target, Hansen said.
Traders are now focused on the Fed’s Dec. 17-18 meeting, with markets predicting a 97% chance of a 25-basis-point rate cut, according to the CME Group’s FedWatch Tool.
Fed Chair Jerome Powell’s commentary will be scrutinised to gauge the outlook for 2025 as inflation remains above the central bank’s 2% annual target.
“Gold prices at $3,000+ or $2,500 is contingent on whether the Fed is ahead or behind the Trumpflation curve; we expect them to be behind, leading to falling real rates and a softer U.S. dollar in the latter half of the year,” Nicky Shiels, head of metals strategy at MKS PAMP SA, said.
Spot silver fell 0.5% to $30.80 per ounce.
Platinum rose 0.3% to $933.10, while palladium was 0.3% higher at $972.62. Both metals were set for weekly gains.
(Reporting by Daksh Grover and Rahul Paswan in Bengaluru, additional reporting by Swati Verma and Anushree Mukherjee; Editing by Shilpi Majumdar, Kirsten Donovan)
