Gold spot prices rose 0.15% ($4.01) to $2,616.76 per ounce on Tuesday, up from the previous close of $2,612.75. Gold futures also gained 0.2%, settling at $2,632.20 per ounce. The precious metal advanced during subdued holiday-period trading as investors turned their attention to the Federal Reserve’s monetary policy for 2025 and the economic implications of Donald Trump’s return to the White House.
Gold has been on a record-breaking trajectory this year, with prices surging 27% so far—their best annual performance since 2010. A combination of central bank buying, monetary policy easing, and geopolitical tensions has fuelled demand for the yellow metal.
The Federal Reserve’s rate cuts in September, November, and December have supported gold by lowering the opportunity cost of holding the non-yielding asset. However, recent signals from the Fed suggest a slower pace of rate reductions in 2025, with markets pricing in just 35 basis points of easing. This tempered outlook has eased inflation concerns following benign U.S. inflation data last Friday.
Han Tan, Chief Market Analyst at Exinity Group, commented, “Gold could reach $3,000 in 2025, assuming markets adhere to bullion’s role as an inflation hedge, especially if Trump’s policies reignite U.S. inflationary pressures.”
Donald Trump’s upcoming return to the White House in January 2025 is adding to market uncertainty. Proposed changes to tariffs, deregulation, and tax policies could create volatility across financial markets. Analysts believe heightened geopolitical tensions under Trump’s administration may further boost gold’s safe-haven status.
“Bullion bulls may enjoy another stellar year ahead if global geopolitical tensions are ramped up under Trump 2.0, potentially pushing investors towards this time-tested safe haven,” Tan added.
Gold’s appeal as a hedge against inflation and a refuge during economic and geopolitical instability remains strong. However, higher interest rates can undermine its attractiveness by increasing the opportunity cost of holding the non-yielding metal.
Among other precious metals, spot silver dipped 0.1% to $29.61 per ounce, platinum declined 0.1% to $937.95 per ounce, while palladium rose 1.6% to $944.78.
As investors navigate the evolving economic and political landscape, gold’s trajectory in 2025 will likely be influenced by the Federal Reserve’s policy stance and global developments under the Trump administration.
