Gold edges up as Fed signals caution on 2025 rate cuts

December 23, 2024 (MLN): Gold spot prices gained 0.32% ($8.36) at $2,630.36 per ounce, as of [11:55 am PST] from the prior day's close of $2,623.61 per ounce, This marks the highest level since November 25.

Gold futures also decreased 0.27% to $2,674.8.

Spot gold edged higher in thin trade on Monday, as investors covered their short-positions after the U.S. Federal Reserve's cautious stance on rate cuts for 2025 dragged prices to one-month lows last week.

The Fed's 25-basis-points rate cut on Dec. 18 and the cautious note struck by its economic projections and expectations of fewer cuts in 2025 pushed gold to its lowest since Nov. 18.

"We are entering the holiday mode and gold's mainly been helped by short-covering, which started on Friday itself and there is some technical support as well," said Ajay Kedia, director at Kedia Commodities, Mumbai.

Gold gained on softer U.S. dollar and Treasury yields on Friday, when U.S. economic data hinted at a slowdown in inflation, as Reuters reported.

Monthly inflation in the U.S. slowed in November after little improvement in recent months, data on Friday showed.

The personal consumption expenditures (PCE) index rose 0.1% last month after an unrevised 0.2% gain in October.

San Francisco Fed President Mary Daly and two other Fed policymakers said they felt the central bank would likely resume rate cuts next year but take their time given that the "recalibration phase" was over.

Higher rates dull non-yielding bullion's appeal.

"The next big impact is the incoming presidency of Mr. Trump and the initial presidential decrees that he might declare", said Michael Langford, chief investment officer at Scorpion Minerals.

"This has the potential to add to market volatility and be bullish for gold prices", he further added.

Meanwhile, COMEX gold speculators cut net long positions by 16,251 contracts to 203,937 in the week to Dec. 17, data showed.

Spot silver rose 0.6% to $29.69 per ounce and platinum climbed 0.9% to $934.38, while palladium steadied at $922.04.

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