Gold Turns Lower As Investors Turn Cautious Ahead Of Fed Meeting

(RTTNews) - Gold prices edged lower on Monday as investors stayed away from big trades as they turned cautious ahead of the U.S. Federal Reserve's two-day monetary policy meeting.

Front Month Comex Gold for December delivery declined by $25.70 (or 0.61%) to $4,187.20 per troy ounce.

Front Month Comex Silver for December delivery slumped by 64.30 cents (or 1.10%) to $57.779 per troy ounce.

In the U.S., the Federal Reserve's two-day Federal Open Market Committee meeting is set to begin tomorrow after which the team will announce their decision on interest rates.

Last week's labor data from ADP and Challenger indicated a sudden spurt in job losses.

Friday's Personal Consumption Expenditure (PCE) print (a crucial indicator for the Fed to gauge inflation) confirmed some cooling in prices.

Available data have so far revealed a softening in employment numbers along with mixed inflation figures.

U.S. President Donald Trump is reportedly planning to nominate Kevin Hassett as the next Fed Chair. Hassett has long been a proponent of slashing rates.

The Fed has already brought down the rates twice this year, calibrating it to the current 3.75% to 4.00% range.

CME Group FedWatch Tool indicates that investors are currently betting on an 89.6% chance of a 25-basis-point interest rate cut at the end of the meeting.

Analysts are also eyeing the Summary of Economic Projections (dot plot) to be released after the meeting for clues about the rate outlook as well as the Powell's post-meeting remarks. While a dovish tone could jack up the prices of stocks, energy, real estate, utilities, etc, a hawkish tone may take the steam out of the markets.

On the geopolitical front, attempts by the U.S. administration to end the Russia-Ukraine war continue with no significant breakthrough.

Last week, high-level officials from the U.S. and Ukraine talked for three days to comprehend Ukraine's concerns and expectations and iron out the differences in the new draft of the U.S. peace plan.

Ukrainian President Volodymyr Zelenskyy stated that he had a "substantive phone call" with American officials. However, yesterday Trump stated that Zelenskyy is not ready to accept the U.S.-formulated peace proposal.

An end to the war could reduce a significant deal of uncertainty currently prevailing in the global economy and boost commodity prices.

This year alone, the yellow metal has seen a surge of around 60% this year by November.

Economists predict that in the short-term, a combination of lower interest rates and an obvious "flight-to-safety" along with continuing central bank purchases could keep the gold prices on the higher side.

The chances of a year-end "Santa rally " now hinges on how the Fed signals on Wednesday.