On Monday, gold prices slightly dropped in quiet trading, with spot gold closing at $2,604.49 per ounce, down 0.6%. U.S. gold futures settled at $2,618.10 per ounce, down 0.5%. Peter Grant, Vice President and Senior Metals Strategist at ZanerMetals, analyzed that this was mainly due to thin trading volumes during the holiday season and mentioned potential year-end window dressing activities.
Although gold prices are under pressure in the short term, the market's risk-averse demand remains strong, with gold prices up nearly 27% for the year. On October 31, gold prices hit a record high of $2,790.15 per ounce, mainly driven by geopolitical uncertainties and expectations of Federal Reserve rate cuts.
Market Focuses on Federal Reserve Policy and Trump's New Policies
As Trump is set to formally take office as president in January, the market anticipates a series of major policy shifts in the U.S. by 2025, including potential tariff adjustments, deregulation, and tax reforms. These policy changes have heightened market uncertainty while also fueling continuous investor interest in gold.
In addition, a series of important U.S. economic data will be released next week, including job vacancy data, the ADP employment report, the Federal Reserve's December meeting minutes, and the non-farm payroll report. These data will provide key insights into the health of the economy and could influence the Federal Reserve's interest rate decisions in 2025.
Risk-Averse Demand Supports Gold's Long-Term Performance
Geopolitical tensions are expected to persist into next year, with major central banks worldwide continuing to increase their gold holdings. Additionally, concerns about worsening U.S. debt and fiscal deficits during the Trump administration have further stoked demand for gold as a safe haven.
Performance of Other Precious Metal Markets
Apart from gold, other precious metal prices also generally declined on Monday. Spot silver fell 1.3% to $28.98 per ounce; platinum dropped 1.5% to $905.62, earlier hitting its lowest point in over three months; palladium decreased 1% to $902.16.
Although gold prices are undergoing a short-term correction, analysts generally believe that geopolitical, economic policy uncertainties, and global macroeconomic changes in 2025 will continue to support the gold market. Investors will closely monitor future policies and economic data to gauge the long-term trends of precious metals.
