Gold drops ahead of Fed meeting, still set for strong annual gain

Gold fell to around $2,640 per ounce on Tuesday ahead of the Federal Reserve’s two-day meeting, with investors focusing on the central bank’s outlook for 2025.

Gold drops ahead of Fed meeting, still set for strong annual gain

The Fed is widely expected to cut rates by 25bps, but uncertainty lingers regarding the extent of future easing, especially with the potential for higher inflation under a possible Trump administration. Recent data showed faster growth in US private sector activity in December, suggesting the Fed may limit rate cuts next year, which could reduce demand for gold.

Gold set for biggest annual gain since 2010, up 29%

Despite this, bullion has risen by about 29% this year. It is on track for its largest annual gain since 2010, driven by US policy easing, strong demand for safe-haven assets, and continued central bank purchases worldwide.