Spot gold rises as investors await Fed's decision, Trump's tariff policies

December 24, 2024 (MLN): Gold spot prices gained 0.15% ($4.01) at $2,616.76 per ounce, as of [03:54 pm PST] from the prior day's close of $2,612.75 per ounce. Gold futures was up 0.2% to $2,632.20.

Gold prices gained in quiet holiday-period trading on Tuesday, while investor focus was on the Federal Reserve's rate strategy for next year and Trump's future tariff policies.

After aggressively cutting rates in September and November this year, the Fed persisted with cuts in December but hinted at fewer cuts in 2025, as Reuters reported.

Central bank buying, monetary policy easing, and geopolitical tensions have propelled the bullion to multiple record highs this year, putting it on track for its best year since 2010 with a 27% increase so far.

A benign U.S. inflation reading on Friday eased some concerns about the pace of cuts next year.

However, markets are still pricing in just about 35 basis points worth of easing by for 2025.

"Gold could reach $3,000 in 2025, assuming markets adhere to bullion’s role as an inflation hedge, especially if Trump’s policies reignite US inflationary pressures," said Exinity Group Chief Market Analyst Han Tan.

U.S. investors are preparing for a swathe of changes in 2025 from tariffs and deregulation to tax policy that will ripple through markets as Donald Trump returns to the White House in January.

"Bullion bulls may enjoy another stellar year ahead if global geopolitical tensions are ramped up under Trump 2.0, potentially pushing investors towards this time-tested safe haven," Tan added.

Gold is considered a safe investment during economic and geopolitical turmoil but higher rates increase the opportunity cost of holding the non-yielding asset.

Among other metals, spot silver fell 0.1% to $29.61 per ounce, platinum eased 0.1% to $937.95, while palladium rose 1.6% to $944.78.

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