Spot gold climbs on policy anticipation, dollar decline

January 03, 2025 (MLN): Gold spot prices increased by 0.16% ($4.3) at $2,653.92 per ounce, as of [2:58 pm PST] from the prior day's close of $2,658.23 per ounce.

U.S. gold futures rose 0.1% to $2,670.70.

Gold prices firmed near three-week highs on Friday, supported by a softer U.S. dollar and safe-haven flows.

The metal was set for a weekly gain as attention shifted to upcoming U.S. economic data and President-elect Donald Trump's proposed policy changes.

The dollar index (DXY) fell 0.3%, making dollar-priced bullion a tad more affordable for holders of other currencies, as Reuters reported.

"We have seen an uptick in safe-haven flows, which has been to the benefit of gold," said Tim Waterer, chief market analyst at KCM Trade.

"Any pullback in the U.S. dollar could prove to be a catalyst for gold to break out higher."

Trump's inauguration on Jan. 20 has heightened uncertainty, with his proposed tariffs and protectionist policies expected to be inflationary and potentially spark trade wars.

On the geopolitical front, Israeli air strikes killed at least 68 Palestinians in Gaza. Meanwhile, Russia launched a drone strike on the Ukrainian capital Kyiv on Wednesday, causing damage in at least two districts.

On the economic front, a flurry of U.S. data next week, including the nonfarm payrolls report and minutes of the Federal Reserve's meeting, will give traders cues on monetary policy.

This comes as the Fed has lowered its forecast for rate cuts in 2025.

U.S. stocks finished lower on the first trading day of the year after opening the session higher.

Gold flourishes in low interest rate environments and serves as a hedge against economic and geopolitical uncertainties.

"Global trends will continue to play a big role and continue to move the gold market forward", said Julia Khandoshko, CEO at broker Mind Money.

The metal will grow gradually, showing stable growth values throughout the year", Julia Khandoshko further added.

Spot silver rose 0.1% to $29.59 per ounce, platinum was steady at $923.10, and palladium inched up 0.1% to $911.90.

All three metals were on track for weekly gains.

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