RAW MATERIALS
* Spot gold rose 0.1% to $4,194.83 an ounce as of 0146 GMT.* U.S. gold futures for December delivery rose 0.2% to $4,223.60 an ounce.
* Yields on 10-year U.S. Treasury bonds rose to a 2.5-month peak on Monday, with yields accelerating higher after a powerful earthquake struck Japan and investors braced for the Fed’s next policy announcement.
* Analysts expect the Fed to make a “hawk-like cut,” with the language of the statement, the average forecasts and Chairman Jerome Powell’s press conference pointing to a higher bar for further rate cuts.
* Data on Friday did not change expectations for Fed policy easing. Inflation, as measured by the Personal Consumption Expenditures (PCE) Price Index, was in line with expectations, while US consumer confidence improved in December.
* Last week, private payroll data showed the sharpest decline in more than 2.5 years in November, while U.S. jobless claims fell to 191,000 for the week ending Nov. 29, a more than three-year low.
* The market estimates an 87% chance of a 25 basis point rate cut, up from 90% on Monday at the U.S. central bank’s Dec. 9-10 policy meeting, CME’s FedWatch Tool shows.*Lower interest rates tend to favor non-yielding assets like gold.
* Morgan Stanley sees further upside potential in gold, driven by a falling US dollar, strong ETF buying, continued central bank buying and safe-haven demand.
* Elsewhere, silver fell 0.1% to $58.05 an ounce, platinum rose 0.4% to $1,649.46, while palladium rose 0.6% to $1,473.32.
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