On January 7th, international gold prices rose, with spot gold breaking through the $2,660 per ounce mark at one point, a 0.5% increase, closing at $2,648.75. The main driving force was the uncertainty of President-elect Trump's tariff policy, which led to a weaker dollar, combined with China's central bank increasing its gold reserves for the second consecutive month, providing further support for gold prices.
Weaker Dollar and Policy Uncertainty Boost Gold Prices
A report from The Washington Post about Trump's tariff plan potentially being less aggressive than expected raised market concerns about future U.S. trade policy, causing the dollar index to fall to a one-week low. However, Trump later denied the report, further increasing uncertainty about future policies.
A weaker dollar makes gold priced in other currencies more attractive, drawing more investor attention. Traders are also closely watching U.S. employment data to be released this week, including Friday's non-farm payrolls, ADP employment data, and the Federal Reserve's December meeting minutes, for more clues on future policy direction.
Federal Reserve Governor Lisa Cook stated that despite a robust economy and inflation above expectations, the Fed is cautious about further rate cuts. This stance could exert some pressure on the long-term trajectory of gold, as high interest rates usually diminish gold's appeal.
Chinese Central Bank's Gold Purchases Highlight the Market
Meanwhile, official data shows that China's central bank has increased its gold reserves for the second consecutive month, with reserves reaching 73.29 million ounces by the end of December 2024. This move indicates that China's strong demand for gold continues and may continue to support gold prices in the future.
Market analyst Evangelista noted, "With December's return to the market, Beijing has demonstrated its enthusiasm for its gold acquisition plan. This development could continue to be a key support factor for rising gold prices."
Strong Gold Price Performance in 2024; Future Outlook Remains Upbeat
Looking back at 2024, gold prices increased by approximately 27% throughout the year, mainly benefiting from strong central bank purchasing power and the Federal Reserve's rate cuts. Gold, as an important tool for hedging inflation, continues to attract global investors' favor.
Looking ahead, fluctuations in the gold market remain tied to multiple factors. The further trajectory of the dollar, Federal Reserve monetary policy, global economic uncertainties, and central bank buying activities will all be important variables influencing gold prices. If gold can successfully break through the current resistance level, it may usher in a new bull run, aiming for higher price levels.
Investors need to pay close attention to upcoming economic data and policy signals to grasp market dynamics and potential investment opportunities. Future performance of gold prices may become an important indicator of global economic confidence.
