Investing.com-- Gold prices steadied near a one-month low in Asian trade on Friday and were headed for weekly losses after the U.S. Federal Reserve’s forecast of fewer than expected interest rate cuts in 2025 put investors on edge.
The Fed lowered interest rates by 25 basis points as expected, but signaled it will adopt a slower rate cut path, with just two more cuts in 2025. Markets were expecting four cuts before the decision.
Spot gold was slightly higher at $2,596.82 per ounce, while gold futures expiring in February ticked up 0.1% to $2,610.30 an ounce by 22:35 ET (03:35 GMT).
Spot prices were down nearly 2% this week, facing pressure from a strong dollar. The greenback surged to an over one-year high this week.
Hawkish Fed outlook dents gold, PCE data awaited
Gold prices hit a one-month low on Wednesday, after the Fed signaled that rates will remain higher for a longer period after Wednesday’s cut.
Higher interest rates put downward pressure on gold as, as the opportunity cost of holding gold increases, making it less attractive compared to interest-bearing assets like bonds.
Traders are now pricing in only a single quarter-point reduction in 2025 amid continued economic resilience and still-elevated inflation.
Gross domestic product data released on Thursday further cemented the Fed’s outlook, as the U.S. economy grew at a faster pace than previously estimated in the third quarter.
Other data showed that initial jobless claims fell more than expected last week, suggesting a gradual labor market slowdown was in place.
Continued resilience of the U.S. economy can reduce the demand for safe-haven assets, further dampening bullion’s prospects.
Investors are now awaiting the release of PCE price index data, the Fed's preferred inflation gauge, to gain further insight into the U.S. economic outlook.
Other precious metals were weaker on Friday. Platinum futures fell 0.4% to $921.75 an ounce, while silver futures also lost 0.4% to $29.302 an ounce.
Copper rises on US data, China stimulus hopes
Among industrial metals, copper prices rebounded after a slump on Thursday as as strong U.S. economic data spurred some hopes that copper demand will improve.
Hopes of more fiscal spending in China also aided the red metal, as recent reports suggested Beijing will ramp up fiscal stimulus in the coming year. The People's Bank of China left its benchmark loan prime rate unchanged on Friday, as looser monetary conditions provided limited support to the economy over the past two years.
Benchmark copper futures on the London Metal Exchange rose 0.4% to $8,925.30 a ton, while one-month copper futures were largely steady at $4.0855 a pound.