Gold prices rose modestly on Monday, driven by investor short-covering after the U.S. Federal Reserve’s cautious stance on rate cuts for 2025 caused prices to dip to one-month lows last week.
Spot gold gained 0.2%, reaching $2,626.47 per ounce as of 0510 GMT, trading within a narrow $11 range. U.S. gold futures dipped slightly by 0.1% to $2,641.50. Last week, gold prices hit their lowest point since November 18, following the Federal Reserve’s decision to reduce interest rates by 25 basis points on December 18 and its more cautious economic projections, which signaled fewer rate cuts in 2025.
Ajay Kedia, director at Kedia Commodities in Mumbai, attributed the recent uptick in gold prices to short-covering, which began on Friday, along with some technical support. “We are entering the holiday season, and gold has mainly benefitted from short-covering,” Kedia said.
Gold also gained on Friday, supported by a weaker U.S. dollar and falling Treasury yields, following economic data suggesting a slowdown in inflation. U.S. monthly inflation data for November showed a modest 0.1% rise in the Personal Consumption Expenditures (PCE) index, following a 0.2% increase in October.
Several Federal Reserve officials, including San Francisco Fed President Mary Daly, indicated that while the central bank may resume rate cuts in 2025, it will take a cautious approach now that the “recalibration phase” of monetary policy has concluded. Higher interest rates typically reduce the appeal of non-yielding assets like gold.
Market observers are also watching potential political developments in the U.S. “The upcoming presidency of Mr. Trump and any initial presidential decrees could add volatility to the market, potentially benefiting gold prices,” said Michael Langford, chief investment officer at Scorpion Minerals.
In related markets, COMEX data revealed that gold speculators reduced their net long positions by 16,251 contracts to 203,937 in the week ending December 17.
Other precious metals also saw gains, with spot silver rising 0.6% to $29.69 per ounce and platinum climbing 0.9% to $934.38. Palladium held steady at $922.04 per ounce.
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