Gold fell sharply, as traders weighed the outlook for interest rates after the Federal Reserve signaled caution over the path of easing next year.

Bullion traded near $2,590 an ounce, after falling 2.3% to a one-month low on Wednesday as the U.S. central bank cut interest rates for a third straight time but controlled the number of reductions expected in 2025. Fed Chair Jerome Powell told reporters that while the bank is "on track to continue cutting," officials must first see more progress on inflation.

New quarterly forecasts showed some officials are expecting fewer rate cuts next year than they had expected a few months ago, prompting swap traders to scale back bets on easing in 2025. Higher borrowing costs are typically negative for the precious metal, since it doesn't pay interest. After the news, Treasury yields jumped across the curve, while the dollar index rose nearly 1% to levels not seen since 2022 as the greenback strengthened against major currencies. Higher yields typically weigh on non-interest-bearing bullion, while a stronger greenback tends to make the U.S.-denominated commodity more expensive for most buyers.

The precious metal has gained a quarter this year on support from monetary easing in the U.S., safe-haven demand and continued buying by global central banks.

Elsewhere, traders are also looking ahead to interest-rate decisions from the Bank of Japan and the Bank of England due later Thursday. Policymakers in Tokyo are widely expected to keep borrowing costs unchanged, while investors are increasingly betting on fewer cuts by BOE officials next year — putting them at odds with official guidance ahead of Thursday's central bank decision.

Spot gold edged up 0.2% to $2,590.31 an ounce as of 8:12 a.m. in Singapore. The Bloomberg Dollar Spot Index rose 0.1%, after jumping 0.9% in the previous session. Silver advanced, palladium eased and platinum was little changed.

Source: Bloomberg