Gold Prices Stay Stable as Traders Watch Fed Plans for 2025
Gold holds steady at $2,612 as traders keep an eye on 2025 Fed rate plans. A strong dollar and market uncertainty affect prices.
Gold prices stayed largely unchanged on Tuesday, reflecting cautious sentiment among traders as they assessed the possibility of slower interest-rate cuts by the US Federal Reserve next year. Spot gold hovered near $2,612 an ounce, a modest recovery after a 0.4% dip on Monday.
The drop in US consumer confidence, likely driven by uncertainty surrounding the incoming Trump administration’s policies, added to the subdued market mood. Meanwhile, thin holiday trading and a stronger US dollar further tempered any significant moves in gold prices.
Pranav Mer, an analyst with JM Financial Services in Mumbai, highlighted the challenges facing gold in the current environment. “The stronger dollar continues to weigh on prices, even as holiday trading remains light,” Mer said in a note.
Advertisement
Fed’s Stance Adds to Market Caution
Earlier this month, Federal Reserve Chair Jerome Powell signaled a more cautious approach to interest-rate cuts in 2025, citing the need for clearer progress in taming inflation. Historically, lower interest rates support gold prices by making the non-yielding asset more attractive compared to interest-bearing investments.
Gold has had an extraordinary year, climbing over 25% in 2024. This surge was fueled by a mix of factors, including earlier rate cuts, heightened demand for safe-haven assets, and strong buying by central banks. However, the rally has slowed recently, with the dollar strengthening in the wake of Donald Trump’s election victory.
Dollar Strength Keeps Gold in Check
The US dollar’s recent performance has added another layer of complexity to the gold market. The Bloomberg Dollar Spot Index remained flat on Tuesday after a 0.3% increase in the previous session. A stronger dollar typically makes gold and other commodities more expensive for buyers using other currencies, putting pressure on demand.
As of mid-morning in New York, gold prices held steady at $2,612.39 an ounce. Other precious metals saw mixed results, with palladium and platinum posting small gains while silver edged lower.
With traders keeping a close eye on signals from the Federal Reserve and the evolving economic landscape, gold’s future trajectory will likely depend on how these factors unfold. For now, the market seems to be in a holding pattern, waiting for clearer signs of what lies ahead.
Also Read: Oil Prices Recover in Pre-Holiday Trade as U.S. Economy Shows Strength
