Gold at 1-month low after Fed flags slower rate cut pace next year
Dec 19 (Reuters) -Gold prices languished near a one-month low on Thursday after the U.S. Federal Reserve indicated it would slow the pace of its monetary policy easing cycle next year, lifting the dollar and Treasury yields.
FUNDAMENTALS
* Spot gold XAU= were little changed at $2,588.80 per ounce as of 0008 GMT, after dropping more than 2% overnight to hit its lowest since Nov. 18. U.S. gold futures GCv1 were down 1.9% to $2,602.70.
* The Fed cut rates by 25 basis points to the 4.25%-4.50% range and its summary of economic projections (SEP) indicated it will make rate cuts totaling a half percentage point by the end of 2025.
* Fed Chair Jerome Powell said that Fed policymakers want to see more progress on bringing inflation down as they consider the path of future rate cuts, as inflation has exceeded year-end projections.
* The dollar index .DXY rose to its highest level in two years after the rate cut decision from the Fed, making gold more expensive for other currency holders, while U.S. Treasury yields surged. USD/ US/
* Markets now expect the Fed to leave its benchmark overnight rate unchanged at the Jan. 28-29 policy meeting. Higher rates reduce the appeal of holding the non-yielding asset.
* Traders now looked forward to key U.S. GDP and Core Personal Consumption Expenditure data due later this week for more cues on monetary policy.
* Meanwhile, the Hong Kong Monetary Authority (HKMA) cut its base interest rate charged via the overnight discount window by 25 basis points to 4.75%, tracking the move by the Fed.
* The Indian government is re-examining a surge in gold imports that widened the country's trade deficit to a record in November and pushed the rupee to an all-time low, two government sources aware of the matter told Reuters.
* SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.03% to 863.90 metric tons on Wednesday. GOL/ETF
* Spot silver XAG= was steady at $29.37 per ounce, platinum XPT= was down 0.4% to $915.45 and palladium XPD= eased 0.2% to $901.30.
DATA/EVENTS (GMT)
0745 France Business Climate Mfg Dec
0745 France Business Climate Overall Dec
1200 UK BOE Bank Rate Dec
1330 US GDP Final Q3
1330 US Initial Jobless Clm 14 Dec, w/e
1330 US Philly Fed Business Indx Dec
1500 US Existing Home Sales Nov
Japan JP BOJ Rate Decision 19 Dec
Reporting by Brijesh Patel in Bengaluru; Editing by Alan Barona
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