Gold holds ground as traders brace for Fed rate decision

Gold prices firmed on Tuesday as focus shifted to the Federal Reserve's first meeting of 2025, while investors try to decipher how U.S. President Donald Trump's policies will impact the U.S. central bank's views on growth and inflation.

FUNDAMENTALS

* Spot gold held its ground at $2,742.49 per ounce, as of 0101 GMT. U.S. gold futures added 0.3% to $2,746.70.


* Gold prices fell more than 1% in the previous session amid a broader market sell-off, triggered by investor interest in DeepSeek, a Chinese AI startup.

* U.S. policymakers are expected to leave interest rates unchanged at their rate-setting meeting, which starts later in the day and ends on Wednesday, but Trump may complicate the job, after he said last week he wants the Fed to lower borrowing costs.

* Investors will also focus on any cues regarding future policy decisions as Trump begins his second term, with tariff policies likely to fuel inflation.

* Bullion's appeal as an inflation hedge may be diminished if Trump's policies, which are seen as inflationary, lead the Fed to maintain rates higher for longer.

* Gold prices look set for a record-breaking 2025 as heightened economic uncertainty and inflation concerns under Trump's latest term boost demand, despite dollar strength and lower U.S. rate-cut outlook.

* Analysts have downgraded their price forecasts for platinum and palladium in 2025 as demand prospects struggle to improve significantly, though average prices for both metals are expected to edge higher in 2026, a Reuters poll showed on Monday.

* Spot silver was 0.2% lower at $30.15 per ounce, palladium dropped 0.4% to $957.25 and platinum fell 0.3% to 944.35.

* Elsewhere, China's net gold imports via Hong Kong in December fell 84% from the previous month, dropping to their lowest since April 2022, Hong Kong Census and Statistics Department data showed on Monday.

DATA/EVENTS (GMT) 1330 US Durable Goods Dec 1500 US Consumer Confidence Jan