Gold Prices Edge Higher in Asian Trade, Supported by a Weaker Dollar
Gold prices posted modest gains in Asian trading on Thursday, building on their strong performance in 2024 as a softer U.S. dollar lent support. However, caution prevailed among traders due to the Federal Reserve’s forecast of limited interest rate cuts in 2025.
Spot gold rose 0.3% to $2,632.82 per ounce, while February gold futures inched up 0.1% to $2,644.47 per ounce as of 23:06 ET (04:06 GMT).
Gold Ends 2024 with Robust Gains but Faces Challenges in 2025
The yellow metal surged 27% in 2024, its best annual performance since 2010, driven by substantial rate cuts by the Federal Reserve and heightened geopolitical tensions worldwide.
Lower interest rates reduce the opportunity cost of holding gold compared to yield-generating assets like bonds, encouraging investors to view gold as a valuable store of wealth and a hedge against global uncertainties.
Despite its strong annual performance, gold encountered resistance following the Federal Reserve’s December meeting, which signaled only two additional rate cuts in 2025. The cautious stance dampened gold’s momentum, resulting in subdued price movements heading into the new year.
Dollar Softens but Remains Near Multi-Year Highs; Precious Metals Gain
The U.S. Dollar Index slipped 0.2% during Asian trading hours on Thursday but hovered near a two-year high reached last month. U.S. Dollar Index futures also remained elevated.
The dollar’s strength, supported by expectations of limited rate cuts in 2025, has added pressure on gold prices. Nonetheless, other precious metals saw gains, reflecting a mixed outlook for the sector.
Stronger Dollar Pressures Gold Prices, Other Precious Metals Gain
A robust U.S. dollar continued to weigh on gold prices, as it made the yellow metal more expensive for buyers holding other currencies.
In contrast, other precious metals traded higher on Tuesday. Platinum Futures rose 0.7% to $916.65 per ounce, while Silver Futures climbed 1.6% to $29.715 per ounce.
Copper Gains on Weaker Dollar and Chinese PMI Data
Copper prices advanced on Thursday, supported by a softer dollar and a modest increase in Chinese factory activity.
Data from Caixin revealed that China’s manufacturing sector expanded in December, albeit at a slower-than-expected rate. This indicates that the effects of recent stimulus measures are diminishing. Markets are now looking for further details on Beijing’s 2025 economic policies, with expectations of a more accommodative monetary stance.
Benchmark Copper Futures on the London Metal Exchange rose 0.9% to $8,863.50 per ton, while February Copper Futures added 0.7% to $4.0492 per pound.
