Gold stable in anticipation of FOMC meeting on December 15

Gold prices stabilized on Wednesday amid expectations of new Federal Reserve interest rate measures.

In recent weeks, a growing number of Fed officials said the central bank was likely to raise interest rates in December by a relatively small amount, 50 basis points (bps). That was a boost to bets that the U.S. inflation rate had peaked and that the central bank would eventually scale back the pace of interest rate hikes.

Such a scenario is favorable for metals markets, which have come under pressure from rising interest rates this year. 

In the near term, a slowdown in the pace of rate hikes will provide some relief for gold: rising interest rates this year have increased the cost of being able to hold the yellow metal. Markets are predicting a 75% chance that the Fed will raise rates by 50 bps in December. 

But on Tuesday, Kansas City Fed President Esther George warned that interest rates could stay high for a bit longer in order to reduce inflation. Presumably, such a scenario would put pressure on the metals markets next year.