Gold prices (XAU/USD) experienced a dip near $2,600 during early Asian trading on Tuesday, as market participants await new developments that could influence future price movements. Investors are particularly focused on the US interest rate outlook and potential trade policy shifts under President-elect Donald Trump. With the year-end approaching, market activity is expected to remain subdued.
The US Federal Reserve’s cautious stance could continue to weigh on gold prices, as rising interest rates typically reduce the appeal of non-yielding assets like gold. Federal Reserve Chairman Jerome Powell recently signaled a more measured approach to rate cuts, following a 25-basis point reduction earlier this month. According to the latest Summary of Economic Projections (SEP), the Fed plans to scale back its rate cuts for 2025, reducing the number of anticipated quarter-point reductions from four to just two.
On the other hand, geopolitical tensions, coupled with the possibility of Donald Trump’s return to the White House, may escalate global trade conflicts and contribute to instability. This could increase demand for gold as a safe-haven asset. OANDA’s Senior Market Analyst for Asia Pacific, Kelvin Wong, commented that geopolitical risks have been a key driver for gold’s gains this year and are expected to continue impacting the market into 2025, particularly with the potential for Trump’s resurgence in US politics.
As the year winds down, traders remain on edge, with gold’s future direction largely contingent on external catalysts and the evolving global economic and political landscape.
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