Markets expect a quarter-point interest rate cut at today's Fed meeting. Bullion is on track for its biggest annual increase since 2010

Gold traded in a narrow range ahead of the Federal Reserve's upcoming interest rate decision, with traders looking for clues on the path of monetary policy next year.

Bullion traded near $2,645 an ounce, having fallen 0.2% in the previous session, as traders awaited the U.S. central bank's last policy meeting of the year later on Wednesday.

While markets widely expect another quarter-point cut, the number and pace of subsequent cuts in 2025 are unclear, given that the incoming Trump administration could pursue inflationary policies.

Fed policymakers could adjust their language in their post-meeting policy statement and raise the projected path of borrowing costs.

They will also provide updated quarterly economic forecasts. Lower interest rates are generally positive for gold, which pays no interest.

Traders will also be watching U.S. data for further clues on the outlook for 2025, with gross domestic product and the core personal consumption expenditures index — the Fed's preferred gauge of underlying inflation — due later this week.

The precious metal has risen 28% this year, on track for its biggest annual gain since 2010, supported by monetary easing in the U.S., safe-haven demand and continued buying by global central banks.

Spot gold was little changed at $2,648.73 an ounce at 9:29 a.m. in London. The Bloomberg Dollar Spot Index was steady. Silver, palladium and platinum were all lower.

Elsewhere, India's gold imports surged to a record in November after the government cut customs duties. Full-year demand is expected to grow 7% to 905 tonnes in 2024 — the second-highest volume since 2015, according to a report this week from consulting firm Metals Focus. However, high bullion prices are likely to weigh on consumption next year, with demand expected to fall 4% in 2025, it added.

Source: Bloomberg