Gold inches up slightly as investors await Fed rate cut decision

SINGAPORE: Gold prices inched higher on Wednesday as investors waited for the US Federal Reserve’s widely anticipated interest rate cut, though optimism over progress in US-China trade talks limited the metal’s upward move.

Spot gold rose 0.2 percent to $3,957.42 per ounce by 0257 GMT, recovering slightly after touching its lowest level since October 7 in the previous session. Meanwhile, US gold futures for December delivery slipped 0.3 percent to $3,971.20 per ounce.

Trade optimism caps gains

Market analysts said that easing trade tensions between Washington and Beijing reduced the demand for safe-haven assets like gold.

“The fuel for this short-term correction in gold is a readjustment from safe-haven instruments toward more responsive assets like global equities due to trade optimism,” said Kelvin Wong, a senior market analyst at OANDA.

Wong added that while gold faces short-term pressure due to technical corrections and profit-taking, its long-term outlook remains positive.

Over the weekend, top US and Chinese officials reportedly finalised the framework for a potential trade deal between Presidents Donald Trump and Xi Jinping. The agreement is expected to prevent new tariffs from both sides and ease restrictions on Chinese exports of rare earth materials. The two leaders are scheduled to meet in South Korea on Thursday.

In a note, ANZ Bank said that progress in the talks continues to dampen interest in gold. “The recent pullback may actually open a window for central banks to increase their purchases,” it stated.

Markets eye Fed’s next move

All eyes are now on the Federal Reserve, which is expected to cut its key interest rate by a quarter point at the end of its policy meeting later on Wednesday. Investors are also watching for any clues from Fed Chair Jerome Powell about the central bank’s outlook for future rate moves.

A rate cut generally supports gold, as lower interest rates reduce the opportunity cost of holding the non-yielding metal. Gold tends to perform well in periods of economic uncertainty and easy monetary policy.

The European Central Bank, on the other hand, is expected to keep its policy unchanged when it meets on Thursday.

Gold has climbed around 52 percent so far this year, reaching an all-time high of $4,381.21 on October 20. The surge has been fuelled by concerns over global economic growth, expectations of rate cuts, and strong demand from central banks.

Elsewhere in the precious metals market, spot silver rose 0.7 percent to $47.35 per ounce, platinum dropped 0.7 percent to $1,574.25, and palladium slipped 0.2 percent to $1,391.07.

Gold prices extend decline in Pakistan

Gold prices in Pakistan fell sharply on Tuesday, continuing their downward streak as international markets also witnessed a slump.

According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of gold dropped by Rs14,000 per tola, settling at Rs416,362. Similarly, the rate for 10 grammes of gold slid by Rs12,003 to Rs356,963.