Gold prices continue to fluctuate between ups and downs during Monday’s trading, as investors await the results of the US Federal Reserve meeting. The main concern is expectations of raising or keeping interest rates steady, in addition to the economic policies that President-elect Donald Trump may adopt after his return to the White House in January 2025.
Sideways for gold amidst the stability of the dollar
Gold continues to move in a sideways range amidst the relative stability of US dollar index. Kelvin Wong, Senior Market Analyst for the Asia-Pacific region at OANDA, indicated that gold maintains its sideways movement. He explained that geopolitical tensions were one of the main factors that pushed gold higher this year.
At the same time, it seems that these tensions will continue to affect gold prices in 2025, especially with Trump’s re-entry into the political arena. This trend is expected to continue until the beginning of the new year, as gold will remain stuck in a slow sideways movement. Market Volatility Expected as Trump Returns
As markets brace for major changes in US policy, analysts expect potential tariffs, as well as regulatory easing and tax changes set to take effect in 2025, to have a significant impact on gold price movements. Expectations continue that Trump will usher in a new phase of economic policies that will include tax cuts and tariff increases, which could lead to significant volatility in commodity markets, especially gold.
Gold Rallies Amid Geopolitical Turmoil
In recent months, gold prices have risen by more than 27%, hitting an all-time high on October 31, 2024, at $2,790.15 per ounce. This rise stemmed from significant interest rate cuts by the Federal Reserve, including a major cut in September, along with geopolitical turmoil that pushed gold prices to this record level.
The Impact of Interest on Gold prices in 2025
With the Federal Reserve set to cut interest rates by 100 basis points in 2024, the pace of rate cuts is expected to slow in 2025. This slowdown will make gold less attractive as higher interest rates increase yields on other assets, such as government bonds. Higher interest rates reduce demand for gold as a non-fixed-yielding asset, which could lead to lower prices if the Fed continues its monetary tightening policy.
Gold prices decline in the last trading of 2024
In the last trading of gold last Friday, the yellow metal witnessed a slight decline. The price of gold futures for February 2025 delivery fell by 0.85%, or $22 per ounce, to close at $2,631.9. These weekly losses were the result of higher US Treasury yields, which led to weak trading in general due to the end-of-year holiday. Gold prices declined for the second week in a row, after falling by 0.5% last week. Spot gold and futures
In the same vein, spot gold fell 0.16% to $2,615 per ounce. Gold futures also fell 0.15% to $2,628 per ounce. Despite the decline, the downside moves remained mild compared to the big gains gold made in 2024.
Other Precious Metals Futures
Gold wasn’t the only one to see notable market moves. Silver also rose slightly by 0.2% to $29.44 per ounce. Platinum rose 0.3% to $922.30 after hitting its lowest level in more than three months on Friday. Palladium rose 0.4% to $915.19, reflecting a slight improvement in the prices of other precious metals also affected by various economic and geopolitical factors.
Gold prices in 2025: A Look Ahead
Gold will experience significant volatility in 2025 due to several key factors, including changing economic policies, geopolitical tensions, and shifts in the currency market. Although the yellow metal serves as a safe haven in times of turmoil, the coming year will bring new challenges that could significantly impact its prices.
The Impact of US Federal Reserve Policies
One of the most prominent factors that could impact gold prices in 2025 is the US Federal Reserve’s monetary policy. In 2024, we saw a significant decline in interest rates, which supported the rise in gold. However, the Fed is expected to ease the pace of interest rate cuts in 2025. If the central bank continues to raise or hold interest rates, this will reduce the attractiveness of gold as a non-yielding asset, which could lead to a decline in its prices.
Inflation and Geopolitical Unrest
Inflation continues to be one of the factors supporting the demand for gold. With prices increasing in many global markets, gold remains a preferred option as a hedge against the erosion of monetary value. In addition, geopolitical turmoil, such as trade disputes and economic wars, will likely continue supporting demand for the yellow metal. Gold will remain a safe haven for investors.
Trump’s Policy and Its Impact on Markets
With Donald Trump returning to the White House in 2025, economic policies may change significantly, especially with regard to tariffs and increased domestic energy production. Policies that may raise inflation or create volatility in global markets may lead to an increase in demand for gold as a hedge against economic risks. If inflationary economic policies are adopted, gold may witness an additional rise.
