This year the metal precious rose by 28% and reached a record peak $2790.15 on October 31.
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The current rise in gold prices is largely attributed to increased demand for "safe haven" assets as markets anticipate potential economic uncertainty in 2025, leading investors to seek stability in gold as a hedge against potential risks.
Gold rises on safety demand as markets look to 2025 in holiday lull
An employee takes granules of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk/File photo
By Sherin Elizabeth Varghese
December 26, 20249:48 AM PST Updated an hour ago
Dec 26 (Reuters) - Gold prices rose on Thursday, driven by safe-haven demand in light trading after the Christmas holiday as markets awaited signals on the U.S. economy under the incoming Trump administration and Federal Reserve's interest rate strategy for 2025.
Spot gold rose 0.7% to $2,631.52 per ounce, as of 12:01 p.m. ET (1701 GMT). U.S. gold futures added 0.5% to $2,648.50.
President Joe Biden said on Wednesday he asked the U.S. Defense Department to continue its surge of weapons deliveries to Ukraine after condemning Russia's Christmas Day attack against some of Ukraine's cities and its energy system.
"Gold will still be purchased by central banks, and as inflation continues, you may see increased demand for gold on the retail side as well," Pavilonis said, adding that prices are expected to break $3,000 next year.
Gold is considered a hedge against geopolitical turmoil and inflation, but higher rates reduce the appeal of holding the non-yielding asset.
- The yellow metal has gained 28% so far this year and scored an all-time peak of $2,790.15 on Oct. 31.
As Donald Trump prepares to return to the White House in January, markets will be closely monitoring U.S. economic data to gauge how the Fed will navigate inflationary pressures anticipated from his administration's policies, including tariffs, deregulation and tax reforms.
After aggressively cutting rates in September and November, the Fed persisted with easing in December but hinted at fewer reductions in 2025.
Spot silver rose 0.4% to $29.73 per ounce, platinum fell 0.6% to $938.35 and palladium shed 2.9% to $925.24.
Reporting by Sherin Elizabeth Varghese, Anushree Mukherjee and Anjana Anil in Bengaluru; Additional reporting by Swati Verma; Editing by Alistair Bell and Richard Chang
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The price of gold is rising due to the demand for safe assets: markets are preparing for 2025
— December 26, 7:40 p.m.
On Thursday, gold prices rose amid increased demand for safe assets and low trading volumes after the Christmas holidays.
Investors are waiting for signals about US economic policy under the new Trump administration and the Federal Reserve's strategy for interest rates for 2025.
US President Joe Biden said on Wednesday that he had instructed the Pentagon to continue actively supplying weapons to Ukraine, condemning Russia's attacks on Ukrainian cities and the power system on Christmas Day.
Investors are waiting for signals about US economic policy under the new Trump administration and the Federal Reserve's strategy for interest rates for 2025.
- The spot price of gold rose 0.7% to $2633.32 per ounce.
- US gold futures added 0.6%, reaching $2650.20.
US President Joe Biden said on Wednesday that he had instructed the Pentagon to continue actively supplying weapons to Ukraine, condemning Russia's attacks on Ukrainian cities and the power system on Christmas Day.
"Central banks will continue to buy gold, and as inflation rises, demand for gold from retail investors may increase," Pavilonis added, noting that prices could exceed — 3,000 next year.
- Gold is considered a protection against geopolitical instability and inflation, but rising rates reduce the attractiveness of this asset.
- This year, the metal rose by 28% and reached a record peak $2790.15 on October 31.
Next year will be very volatile for the gold market. The first half is likely to be positive due to the escalation of geopolitical tensions, while in the second half there may be a fixation of profits, predicts Ajay Kedia, director of Kedia Commodities in Mumbai.
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