Gold Slips as Investors Turn Cautious Ahead of Federal Reserve Meeting

BY COMFORT OGBONNA

Gold edged slightly lower on Thursday as investors locked in profits and adopted a more cautious tone ahead of next week’s U.S. Federal Reserve meeting. Market participants are closely watching upcoming economic data for clearer clues on the central bank’s next move regarding interest rates, which continue to shape sentiment across the precious metals market.

Spot gold dipped 0.2% to $4,196.96 per ounce as of 0446 GMT, while U.S. gold futures for December delivery also slipped 0.2% to $4,225.90 per ounce. The pullback comes as traders await a potential rate cut and evaluate whether the current momentum in gold prices can be sustained without a new catalyst.

According to Soni Kumari, commodity strategist at ANZ, investors remain cautious ahead of the Federal Open Market Committee meeting. She noted that markets are widely anticipating a 25–basis point rate cut, but a fresh trigger is needed to push gold even higher. Kumari added that ongoing profit-taking is weighing on prices, yet any drop toward the $4,000 level would likely invite strong buying interest due to the metal’s solid long-term fundamentals.

Economic data also played a role in shaping market expectations. The latest ADP report showed that U.S. private payrolls fell by 32,000 in November — the biggest decline in more than two and a half years. Despite this, still-low layoffs suggest the data may not fully reflect the underlying strength of the labor market.

Analysts believe the mixed signals are increasing the likelihood of a rate cut, with markets assigning an 89% chance of easing next week based on CME’s FedWatch tool. Several major brokerages also anticipate a policy shift at the Federal Reserve’s December 9–10 meeting.

Lower interest rates typically favor non-yielding assets like gold, strengthening their appeal to investors. That makes the upcoming release of the delayed September Personal Consumption Expenditures (PCE) Index — the Fed’s preferred inflation measure particularly significant. The data, due Friday, could provide the final clue on whether policymakers will advance with an expected rate cut.

In the broader precious metals sector, silver slipped 0.4% to $58.26 per ounce after briefly touching a record high of $58.98 on Wednesday. Silver has surged 101% so far this year, driven by concerns over liquidity following major flows into U.S. stocks, its recent addition to the U.S. critical minerals list, and an ongoing structural supply deficit. Ajay Kedia, director at Mumbai-based Kedia Commodities, highlighted that Shanghai silver inventories have fallen sharply since mid-November, dropping from around 531 to about 700 tons — the lowest levels since 2015  as Chinese exports have risen significantly.

Overall, both gold and silver markets remain highly sensitive to monetary policy signals, economic data releases, and shifting supply dynamics, setting the stage for potentially sharp movements as investors await clarity from the Federal Reserve.