Gold prices fell slightly in Asian trade on Tuesday, but remained close to record highs amid growing confidence that the Federal Reserve will cut interest rates by a wide margin this week. Spot gold fell 0.2% to $2,578.03 an ounce, while gold futures expiring in December fell 0.1% to $2,605.05 an ounce.
The dollar fell on bets of a bigger rate cut, and the Fed is set to conclude a two-day meeting on Wednesday. Traders are seen pricing in a 68% chance the Fed will cut rates by 50 basis points after a meeting on Wednesday, and a 32% chance of a 25 basis point cut.
Lower rates bode well for gold and other precious metals, reducing the opportunity cost of investing in non-yielding assets. The Fed is expected to signal the start of an easing cycle this week, which could see interest rates drop by over 100 basis points by the end of the year.
