A small low developed approximately 200 km east-northeast of Townsville on 11 January and then moved north northeast and slowly deepened during the next two days. The low reached its most northern position approximately 250 km north northeast of Willis Island at 0000 UTC 13 January and then moved southwards with cyclone status being reached at 0300 UTC 14 January.
Grace continued moving south and passed 95 km east of Willis Island, 125 km to thhe west of Lihou Reef (AWS) and then turned towards the southeast and passed 50 km to the southwest of Marion Reef (AWS). Deepening continued with Grace becoming a severe cyclone when it reached its lowest estimated pressure of 970 hPa around 0600 UTC 16 January. Continuing to move southeast, Grace approached to within 30 km of Frederick Reef (AWS) and 25 km to the northeast of Cato Island (AWS).
At 1600 UTC 16 January, Frederick Reef (AWS) reported the strongest wind speed of 130 km/h and a pressure of 991.5 hPa when Grace was located 60 km to the west.
Visual Satellite imagery on 15 and 16 January indicated a ragged eye. Mackay radar identified about one half of a hemisphere of the eye wall and allowed for positive fixes of the eye for some hours when aty a range of almost 350 km. Upper level shearing became evident on 17 January as the low-level circulation became exposed.
Weakening continued as the cyclone moved into the Nadi region on the evening of 18 January and lost cyclonic intensity on 20 January. The remnant low decayed to the southwest of Noumea on 21 January.
Grace 's influence on Queensland's weather was confined to the central coast where moderate to fresh easterly winds and moderate to heavy rainfalls occurred on 16 January. No damage reports were received and only minor sand losses were reported from the Gold Coast and Sunshine Coast beaches