Gold Prices Fall as Traders Eye 2025 US Rate Uncertainty
Gold prices dip after a four-day rally as traders focus on the uncertain US interest rate path for 2025. Monetary policy shifts keep markets on edge.
Gold prices fell on Thursday, ending a four-day streak of gains, as traders turned their attention to the uncertain path of US interest rates for 2025. While the Federal Reserve is expected to announce a 25-basis-point rate cut next week, the outlook for monetary policy in the coming year remains unclear.
Recent US consumer price data aligned with forecasts, bolstering confidence in the anticipated rate cut. However, concerns about a potential pause or slower rate reductions in 2025 have tempered market enthusiasm.
Gold's Recent Movements
The price of gold, which often benefits from lower interest rates due to its non-yielding nature, dropped by as much as 0.7% to trade near $2,700 an ounce. This decline comes after a three-day rally that saw the metal gain over 3%.
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Despite the dip, gold is on track for its largest annual gain since 1979. Contributing factors include easing by the Federal Reserve, continued purchases by central banks, and strong demand for gold as a safe-haven asset amid global economic and political uncertainties. Notably, China resumed adding to its gold reserves in November, following a six-month pause, further supporting prices.
Market Divergences and Challenges
Traders are closely watching an unusual divergence between gold and silver markets in New York and London. Futures premiums have surged, with some attributing this to fears of potential US tariffs on imported precious metals.
As of Thursday afternoon in Shanghai, the price of gold for immediate delivery fell 0.2% to $2,712.47 an ounce, following a 0.9% increase the previous day. Gold’s all-time high of just over $2,790, reached in October, remains intact.
Outlook for Precious Metals
The weakening US dollar, reflected by a 0.2% drop in the dollar index, also influenced market movements. Meanwhile, silver prices climbed above $32 an ounce, with platinum and palladium also recording gains, signaling a broader positive trend in precious metals.
The months ahead are expected to be critical for gold traders, as they navigate a volatile environment shaped by shifting monetary policies and global economic challenges. Balancing risk and opportunity will be key as the market adapts to evolving conditions.
Also Read: Gold Prices Slide to One-Month Low as Dollar Strengthens Post-Trump Election Win
