Oct 20 (Reuters) – Gold prices decreased in early Asian trading on Tuesday as investors anticipated the US Federal Reserve's upcoming policy decision next week, looking for indications on interest rates and monetary policy direction.
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Spot gold fell 0.3% to $4,126.84 per ounce by 0102 GMT, while US gold futures for December delivery also dropped 0.3%, settling at $4,146.00. Investor attention is focused on the Fed’s meeting scheduled for October 27-28 and the US Personal Consumption Expenditures (PCE) data due next week, which is an important metric the central bank uses to monitor inflation, currently targeted at 2%.
In September, the US central bank raised its benchmark overnight interest rates by 25 basis points to a range of 3.75%-4.00%. According to CME's FedWatch Tool, traders are estimating an 83% chance that the Fed will maintain current rates at the next meeting, while expectations for a rate hike in December are at 94%.
Kazuo Ueda, Governor of the Bank of Japan, remarked that underlying inflation is “quite close” to the central bank’s 2% target, with strong AI demand contributing to inflationary pressure amid a tight job market, indicating potential for further rate increases.
Higher interest rates generally put pressure on gold prices as they elevate the opportunity cost of holding non-yielding bullion. On the geopolitical front, Yemen’s Iran-aligned Houthis announced they conducted several attacks on Saudi energy, airport, and military targets on Monday.
In related metals trading, spot silver decreased by 0.7% to $56.69 per ounce, platinum held steady at $1,639.65, while palladium fell 0.7% to $1,112.08.
Key upcoming data and events include the China Loan Prime Rate for 1Y and 5Y on October 20, UK Claimant Count Change, ILO Unemployment Rate, and HMRC Payrolls Change for September at 0600 GMT, Germany's ZEW Economic Sentiment and Current Conditions at 0900 GMT, and US Housing Starts Number for September at 1230 GMT.
(Reporting by Sukanya Mitra in Bengaluru; Editing by Subhranshu Sahu)