The price of gold futures remained almost unchanged, while the US dollar also consolidated, as market participants took a wait-and-see position in anticipation of the Fed's interest rate decision.
Economists expect the Fed to cut the interest rate again at the end of the December meeting, by 0.25%, with markets pricing in a 95.4% probability, according to the CME's FedWatch tool. But the main focus will be on the updated economic forecasts of Fed policymakers for 2025, in particular, on how much more rates will be cut next year. According to the CME FedWatch Tool, the probability of an additional rate cut in January is 16.3%. If the dot plot points to 2 cuts or less for 2025, markets would read it as hawkish, and the U.S. dollar could see another round of strength, which will put pressure on gold.
In addition to the Fed meeting, meetings of the Bank of Japan, Bank of England, Riksbank, and Norges Bank are also scheduled this week. The precious metal may also be influenced by US data, namely the GDP report for the 3rd quarter and the November core PCE price index (the Fed's preferred inflation indicator). Economists expect GDP growth to slow to 2.8% q/q from 3% q/q in the 2nd quarter, and the core PCE price index increased by 0.2% compared to October and by 2.9% per annum. In October, the core PCE price index increased by 0.3% and 2.8%, respectively.