Gold prices edged higher in Asian trade on Monday after suffering heavy losses last week as a slightly softer U.S. inflation print provided some respite, although caution remained following the Federal Reserve's hawkish stance.
Spot Gold was 0.2% higher at $2,626.65 per ounce, while Gold Futures expiring in February inched 0.1% lower to $2,642.32 an ounce by 22:15 ET (03:15 GMT).
The yellow metal had lost 1% last week after the Fed officials projected fewer interest rate cuts in 2025 in the face of sticky inflation. This hawkish tilt had bolstered the U.S. dollar and created downward pressure on gold prices.
Gold prices remain under pressure after Fed meeting, markets mull over PCE data
Gold prices had hit a one-month low on Wednesday, as the markets lowered expectations for the number of Fed rate cuts in 2025.
Markets now expect the first cut of 2025 to come in June, and are pricing in roughly two reductions in the upcoming year, according to CME FedWatch Tool.
Higher interest rates put downward pressure on gold as the opportunity cost of holding gold increases, making it less attractive compared to interest-bearing assets like bonds.
U.S. data released on Friday showed that PCE price index data—Fed’s favored inflation gauge —rose 0.1% in November, a slower pace from October's 0.2% increase. This brought the annual PCE inflation rate to 2.4%, slightly below estimates of 2.5%.
However, the annual increase in core inflation, excluding volatile food and energy, remained at 2.8%, well above the central bank's 2% target.
