Fed to announce rate decision on Wednesday
Odds of 25 bps cut this week stand at 95.4
Fed39;s hawkish stance could push gold to 2,600 analyst

Dec 17 Reuters Gold prices edged lower on Tuesday, pressured by a stronger U.S. dollar ahead of the Federal Reserve39;s upcoming decision on interest rates and cues on the future direction of monetary policy.

Spot gold was down 0.4 at 2,641.21 per ounce, as of 0926 GMT. U.S. gold futures shed 0.5 to 2,656.30.

The dollar rose 0.2, lowering gold39;s appeal by making it more expensive for other currency holders.

The Fed is set to hold its final policy meeting of the year starting later in the day, with a widely anticipated quarter point interest rate cut expected on Wednesday. However, traders are increasingly convinced the central bank will lower borrowing rates only gradually next year.

Gold traders are apparently reluctant to make sizeable moves just yet, given that the pivotal FOMC Federal Open Market Committee rate decision is just around the corner, said Exinity Group Chief Market Analyst Han Tan.

The Fed meeting will provide insights for future rate cuts in 2025 and 2026, and whether the central bank will scale back easing due to potential inflation under the incoming Trump administration.

According to CME39;s FedWatch tool, the odds of a 25 bps cut this week stand at 95.4, but the chances of a reduction in January are just around 17.

If the Fed delivers a hawkish message and signals an imminent pause in policy…