Precious metals and oil ticked lower on Tuesday as investors positioned for the U.S. Federal Reserve policy decision and signals about future cuts, while European gas came under pressure on easing supply concerns.

The U.S. Federal Reserve is expected to cut interest rates by 25 basis points, a move largely priced in by the market.

When interest rates are low, the opportunity cost of holding gold decreases, leading to increased demand.

Spot gold has risen about 29% year-to-date, and clocked a marginal gain last week. On the day, prices eased -0.49% to $2,638.70 an ounce.

Following the U.S. presidential election on November 5, which resulted in Donald Trump's victory, gold prices declined. However, looking ahead, bullion remains supported by both the U.S. and global macroeconomic factors, VanEck said in a note.

ETFs: (NYSEARCA:GLD), (GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (RING), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ), (COPX), (CPER), (OTC:JJCTF)

Expectations of inflationary policies under the new U.S. administration, heightened global geopolitical risks, strong central bank net buying, and anticipated rate cuts by the Federal Reserve suggest potential upward momentum for gold in the longer term.

Oil prices eased further as China's economic data renewed demand concerns.

Elsewhere, European gas prices came under further pressure as ongoing discussions on Russian gas flows via Ukraine, stronger LNG imports and milder weather forecasts eased any immediate supply concerns, ING analysts noted.

Ongoing discussions to keep Russian gas flowing via Ukraine beyond December 31 are weighing on gas prices currently.

Recent reports suggest that gas buyers in Slovakia and Hungary are continuing discussions to keep gas flowing. Meanwhile, demand for gas pipeline capacity through Bulgaria and Turkey has also increased for January 2024, hinting that market participants are preparing for alternatives if Russian gas flow via Ukraine stops as scheduled, the brokerage noted.

Gas prices are expected to might remain volatile over the coming weeks as higher competition from Asia for LNG creates an upside risk, while an extension of Russian flows would be bearish for prices.

ETFs: (USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG)

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