Gold prices experienced a retreat on Wednesday after reaching a record high in the previous session. This decline was attributed to investors cashing in on profits and a strengthening dollar ahead of a key policy decision from the Federal Reserve later in the day.
As of 1151 GMT, spot gold prices were down 0.6%, trading at $3,668.04 per ounce, following a peak of $3,702.95 on Tuesday. December U.S. gold futures also fell by 0.6%, settling at $3,703.50. The dollar index increased by 0.2%, bouncing back after hitting a two-month low the prior day. A stronger dollar typically renders gold, which is priced in dollars, more expensive for international buyers.
Analyst Rhona O’Connell from StoneX noted that gold has faced resistance at the $3,700 mark in the past, suggesting that option writers may be actively defending this level. The relative strength index (RSI) for gold stood at 75, down from an overbought level of 81 seen the previous day.
The day’s focus is on the Federal Reserve, which is anticipated to announce a quarter-percentage-point rate cut. Analysts are particularly eager for comments from Fed Chair Jerome Powell regarding the future trajectory of interest rates. O’Connell also indicated expectations of dissent among committee members during the vote on this rate cut.
Meanwhile, there are heightened calls from U.S. President Donald Trump for Powell to consider a more substantial rate cut. Lower interest rates typically diminish the opportunity cost associated with holding non-yielding assets like gold.
In a bullish move, Deutsche Bank has upgraded its gold price forecast for next year to an average of $4,000 per ounce, up from $3,700, driven by favorable trends in foreign exchange and interest rates that may further propel gold prices.
In India, the market for used gold jewelry and coins has seen a shortage, as many investors are holding onto their assets in anticipation of further price increases.
Other precious metals also faced declines, with spot silver dropping 2.3% to $41.58 per ounce, platinum decreasing 2.3% to $1,358.67, and palladium falling 2.3% to $1,149.25.
