Global gold prices weakened during Wednesday’s trading session, ahead of the Federal Reserve’s interest rate decision. Spot gold fell by approximately 0.6% to US$4,037.98 per troy ounce, while U.S. gold futures declined by 0.6% to US$4,051.32. A slight strengthening of the U.S. Dollar Index to around 102.42 also exerted pressure on the precious metal.
Despite the correction, gold has managed to retain some of the gains made in the previous session. Buying activity during price dips helped curb further declines, even after prices briefly breached the psychological US$4,000 level in recent days. Physical demand from China has also provided support, as households show increased interest in gold whenever prices soften.
Market sentiment has been influenced by a drop in oil prices, which has helped alleviate some concerns regarding inflationary pressure. Conversely, a rally in global stock markets and renewed interest in the artificial intelligence sector have dampened demand for gold as a defensive asset.
Investors are primarily focused on the Federal Reserve, which is expected to keep interest rates unchanged at this meeting. However, the market remains wary of a potential rate hike before the end of the year, given that inflationary pressures have not yet fully subsided. Comments from Fed Chair Kevin Warsh will be closely watched for indications regarding the policy trajectory following the October meeting.
Beyond the FOMC, investors are also awaiting the release of the U.S. Personal Consumption Expenditures (PCE) price index on Thursday. As the Fed’s preferred inflation gauge, this data will offer key insights into the policy outlook for December. Should inflationary pressures remain high, the U.S. dollar and bond yields could strengthen—putting downward pressure on gold—whereas weaker data could pave the way for a price recovery.