Gold gains as US dollar ease ahead of Fed policy meeting
Investors see Fed lowering rates by 25 bps later in the week
Fed may cap gold gains with extended rate-cut pause after Dec - analyst
Updates with U.S. afternoon hours
By Sherin Elizabeth Varghese
Dec 16 (Reuters) -Spot gold prices gained on Monday, supported by ongoing geopolitical concerns and a softer dollar, as markets awaited the Federal Reserve’s policy meeting, where a third rate cut and clues on the 2025 outlook are expected.
Spot gold XAU= was up 0.1% at $2,651.48 per ounce as of 01:04 p.m. ET (1804 GMT). U.S. gold futures GCv1 slipped 0.3% to $2,668.80.
"I think the continuous presence of geopolitical risks are contributing to gold's strength," said Nitesh Shah, commodity strategist at WisdomTree.
Also, "China has resumed gold buying. So gold is reacting to a multitude of these things," Shah noted, adding that top consumer China was likely to ramp up policy stimulus to revive its economy, which would further support gold.
On the geo-political front, Israel agreed on Sunday to double its population in the Golan Heights, citing Syrian threats despite the moderate tone of rebel leaders who ousted President Bashar al-Assad a week ago.
Bullion is considered a safe investment during economic and geopolitical turmoil, while a low-interest rate environment also makes the non-yielding bullion more attractive.
The Fed is expected to cut rates by a quarter point at its two-day meeting starting on Tuesday, while updating its outlook for 2025 and beyond.
"The economic and political background is generally supportive for gold – but the Fed may cap prices if it points to an extended pause in rate cuts after December," said StoneX analyst Rhona O'Connell.
The dollar index .DXY fell 0.2%, retreating from a near three-week high reached on Friday, making dollar-priced bullion more affordable for holders of other currencies. USD/
Citi projects strong gold and silver demand until U.S. interest rates stabilize, forecasting a peak for both metals in late 2025 to early 2026.
Key data releases this week, including U.S. GDP and inflation figures, could further influence market sentiment.
Spot silver XAG= was steady at $30.56 per ounce, platinum XPT= gained 1.4% to $936.24, while palladium XPD= was down 0.8% at $944.45.
Spot gold price in USD per oz https://reut.rs/41yFQDB
Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Emelia Sithole-Matarise and Mohammed Safi Shamsi
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