Stable Gold Market Trends, 2025 Outlook Draws Attention
As the Christmas holidays approach, the gold market sees light trading this week. On Tuesday (December 24), spot gold prices experienced minor fluctuations, rising slightly by 0.16%, closing at $2616.74 per ounce. Despite a daily range of just $11.36, gold displayed strong performance in 2024, with an expected annual increase of 27%, marking the largest yearly gain since 2010.
Federal Reserve Policy Adjustments Influence Gold Trends
The rise in gold prices in 2024 benefited from continued central bank purchases, geopolitical tensions, and Federal Reserve rate cuts. Analysts suggest this upward trend may continue into 2025, particularly if geopolitical tensions remain high, with prices potentially reaching $2800 per ounce. However, the Fed's interest rate policy remains a key variable. Though the Fed actively reduced rates in September, November, and December of 2024, fewer cuts are expected in 2025. This decision is influenced by persistent high inflation and economic resilience, which also dampens market expectations for further gold price increases.
Dollar and Treasury Yields Pressure Gold Prices
The dollar maintained its strength in holiday trading, closing at 108.11, close to a two-year high. Since September, the dollar has increased by over 7%, driven by market expectations of accelerated US economic growth under Trump's policies. This dollar strength, combined with the rise in 10-year US Treasury yields (reaching 4.630% during Tuesday's session), further dampened gold's appeal. As the opportunity cost of holding gold, rising Treasury yields usually suppress gold prices.
Geopolitical Uncertainty and the Gold Market
Geopolitical situations are also shaping gold market trends. Russia's Ministry of Defense reported on the 24th that in the past day, Russian forces struck 146 military targets in Ukraine, including drone warehouses and ammunition depots. Ukraine's General Staff of the Armed Forces reported 179 battles at the front lines, with fighting continuing in some areas.
Meanwhile, tensions remain high in the Middle East. Israel conducted airstrikes in the Gaza Strip, causing multiple casualties. The Israeli government stated that talks regarding a Gaza ceasefire and personnel exchange are ongoing, though further details need to be reviewed.
Looking Ahead to 2025: Market Full of Uncertainty
Analysts expect market trading volume to remain muted in the coming weeks, with gold trends potentially finding a clearer direction after the US employment report release on January 10, 2025. Investors need to closely monitor Fed policy adjustments, geopolitical developments, and potential impacts from Trump's policies.
For 2025, Vawda analyzes: "Without major geopolitical disruptions, gold prices are expected to hover around $2800 per ounce." However, the strong dollar and the Fed's cautious rate-cutting path will continue to present challenges for gold prices, as the gold market seeks support amid global uncertainty.
