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“Markets are climbing a wall of worry into the close as nods to a period of slower rate cuts predicated on further progress in inflation. Core PCE data later this week now takes on more importance,” said Tai Wong, an independent metals trader.
“Gold is slumping below $2,600, which will worry some nervous bulls,” Wong added.
U.S. central bankers issued fresh projections indicating two quarter-percentage-point rate cuts next year amid rising inflation, a forecast consistent with a wait-and-see approach as President-elect Donald Trump returns to the White House.
Powell said Fed policymakers want to see more progress on bringing inflation down as they consider future rate cuts.
Futures on the federal funds rate have priced in that the Fed will leave its benchmark overnight rate unchanged. Higher rates reduce the appeal of holding the non-yielding asset.
The dollar index opens new tab jumped more than 1% to a two-year high, making gold more expensive for other currency holders, while the benchmark U.S. 10-year yield hit a fresh four-week high.
Traders will be watching now for key U.S. GDP and inflation data due later this week that could further shape expectations around monetary policy.
“I do see the consolidation as a continuation pattern within the longer-term uptrend in gold. I think that trend will re-exert itself in the first quarter of 2025,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Elsewhere, spot silver fell 3.5% to $29.45 per ounce, platinum slipped 2% to $919.25, and palladium declined 3% to $906.88.
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