Gold Holds Ground as Dollar Weakens Ahead of Fed Meeting

Gold Holds Ground as Dollar Weakens Ahead of Fed Meeting

Gold prices managed to recover from earlier losses on Monday as the U.S. dollar eased, capturing attention as investors anticipate the Federal Reserve's first policy meeting of the year. Markets are watching closely for any hints on the future direction of interest rates.

As of 12:10 GMT, spot gold dipped slightly by 0.1%, sitting at $2,766.59 per ounce, after dropping as much as 0.7% earlier in the day. Last Friday, prices approached record highs, sparking further market interest. Meanwhile, U.S. gold futures declined 0.3% to $2,771.40 per ounce.

The U.S. dollar, a key player in the gold market, slipped 0.2%, reversing earlier gains. A weaker dollar makes gold, priced in dollars, more appealing to international buyers.

Han Tan, Chief Market Analyst at Exinity Group, commented, “Risk-off sentiment across global markets has dragged U.S. yields and the dollar lower, helping gold claw back earlier losses. However, spot gold was also due for a technical pullback after narrowly missing a new record high.”

Gold continues to shine during periods of economic uncertainty, thriving as a hedge against inflation and in low-interest-rate environments, where its lack of yield becomes less of a disadvantage.

The Federal Reserve is widely expected to hold rates steady at the conclusion of its Jan. 28–29 meeting, marking a pause in the rate-cutting cycle that began last September. Across the Atlantic, the European Central Bank is set to lower rates by 25 basis points this Thursday.

Other Precious Metals Update:

• Silver: Spot silver eased by 0.2%, now at $30.54 per ounce, following a 0.9% gain last week. Analyst Frank Watson from Kinesis Money noted that the gold-to-silver price ratio is above its three-year average, suggesting silver may have room to outperform gold.

• Palladium: Dropped 1.8% to $970.69 per ounce.

• Platinum: Fell 0.5% to $944.48 per ounce.

The coming week’s central bank decisions will likely set the tone for how precious metals perform moving forward. Keep watching this space for daily updates on bullion trends and analysis!