Investing.com — Gold prices hovered near one-month lows in Asian trading on Friday, as the US Federal Reserve's outlook for lower-than-expected interest rate cuts in 2025 spooked investors. As a result, the stock trended downward for the week.
The Fed cut interest rates by 25 basis points, as expected, but signaled it would only cut rates two more times in 2025 and adopt a more gradual rate-cutting path. Markets had expected four rate cuts before the decision was made.
By 22:35 ET (03:35 GMT), February expiry was slightly higher at $2,610.30 an ounce, up 0.1%, at $2,596.82 an ounce.
Spot prices have fallen nearly 2% this week under pressure from a stronger dollar. The dollar rose this week to its highest level in nearly a year.
Fed's hawkish outlook puts a dent in gold, awaiting PCE data
Gold prices hit a one-month low on Wednesday after the Federal Reserve signaled that interest rates would remain high for a long time after Wednesday's rate cut.
Rising interest rates put downward pressure on gold as the opportunity cost of owning gold increases, making it less attractive compared to interest-bearing assets such as bonds.
Traders are currently pricing in only a one-quarter point decline in 2025 as the economy continues to recover and inflation remains high.
Economic data released Thursday further solidified the Fed's outlook, as the U.S. economy grew faster than previously expected in the third quarter.
Other statistics showed a bigger-than-expected drop last week, suggesting a gradual slowdown in the labor market.
Continued resilience in the U.S. economy could reduce demand for safe-haven assets, further deteriorating the outlook for bullion.
Investors are currently awaiting the release of data on the Fed's preferred measure of inflation to gain further insight into the outlook for the U.S. economy.
Other precious metals also fell on Friday. It fell 0.4% to $921.75 an ounce, while it fell 0.4% to $29.302 an ounce.
Copper rises after US data, hopes for Chinese stimulus
Among industrial metals, copper prices rebounded from Thursday's decline as strong economic data in the U.S. boosted expectations that copper demand would improve.
Expectations for more fiscal spending in China also supported the red metal, with recent reports suggesting the Chinese government will step up fiscal stimulus next year. The People's Bank of China left the benchmark unchanged on Friday as monetary easing over the past two years provided limited support to the economy.
The benchmark price on the London Metal Exchange rose 0.4% to $8,925.30 a tonne, while one-month contracts were almost flat at $4.0855 a pound.
