Gold prices held steady in light holiday trading on Monday as markets awaited critical economic data from the United States and China, as well as potential policy shifts under the incoming Trump administration. Spot gold slipped 0.3% to $2,611.39 per ounce, while U.S. gold futures also declined 0.3% to $2,624.00, reflecting cautious sentiment among investors as the year comes to a close.
Analysts pointed to the reduced trading activity during the holiday season, with investors positioning themselves for key indicators due in the first week of January. These include U.S. job openings data, employment figures, and minutes from the Federal Reserve's most recent policy meeting, which will provide critical insights into the state of the global economy and monetary policy direction.
The Federal Reserve's cautious stance on further interest rate cuts has added another layer of uncertainty for gold traders. In December, the central bank implemented a quarter-point rate reduction but signaled a more measured approach moving forward. Fed Chair Jerome Powell recently emphasized, "We are going to be cautious about further cuts," a statement that markets interpreted as a signal of prudence in 2025.
Despite the subdued session, gold remains one of the standout performers of 2024, posting a 27% annual gain-the strongest since 2010. The surge has been fueled by sustained central bank purchases, geopolitical tensions, and monetary easing policies by major central banks. October saw the metal reach an all-time high of $2,790.15 per ounce.
Geopolitical risks continue to lend support to gold's safe-haven appeal. The protracted conflict between Russia and Ukraine, coupled with escalating tensions in the Middle East, has heightened investor demand for the yellow metal. Recent strikes by Israeli forces in Gaza, resulting in civilian casualties, further underscore the volatile geopolitical environment.
Concerns over the potential impact of the Trump administration's trade policies and tariffs are also influencing market dynamics. These anticipated shifts could disrupt global trade and economic stability, bolstering the appeal of assets like gold. Analysts note that the upcoming U.S. policy changes could serve as a critical driver for gold prices in 2025.
The U.S. Dollar Index (DXY) remained subdued on Monday, trading around 108.00, while U.S. Treasury bond yields depreciated. Lower yields typically enhance the attractiveness of non-yielding assets like gold, further supporting its price levels. Analysts from StoneX Group Inc. remarked that depreciation in Treasury yields is providing an additional layer of support for gold prices.
Gold's performance stands in stark contrast to other metals, which have experienced mixed outcomes in 2024. While iron ore futures have slumped by 28% due to a slowdown in China's construction sector, copper and zinc have shown resilience amid supply disruptions. Lithium prices, however, have continued to fall, reflecting challenges in the electric vehicle industry and a global supply glut.
Technical indicators for gold suggest a consolidation phase, with immediate resistance levels identified at $2,700.00 and $2,726.34, while support levels are seen near $2,624.00 and $2,583.39. Analysts suggest that a break above these resistance levels could signal renewed buying interest as markets navigate the uncertainties of 2025.
Looking ahead, market participants are closely watching China's economic data, expected to reflect the effects of recent fiscal stimulus measures, and the Federal Reserve's evolving monetary policy. Analysts predict that China's economic recovery and continued U.S. monetary easing could sustain gold's upward momentum into the new year.
