Jan 2 2025: Gold prices edged higher during Asian trading on Thursday, supported by a weaker U.S. dollar. Spot gold rose 0.3% to $2,632.82 per ounce, while February gold futures climbed 0.1% to $2,644.47 per ounce by 23:06 ET (04:06 GMT). However, market sentiment remained cautious due to the Federal Reserve’s guidance for limited interest rate cuts in 2025.
Gold’s 2024 Rally and Dimmer Outlook for 2025
Gold closed 2024 with a robust 27% gain, its strongest annual performance since 2010. The rally was fueled by the Fed’s aggressive rate cuts and global geopolitical tensions, which made gold an attractive hedge. Low interest rates reduced the opportunity cost of holding gold compared to interest-yielding assets.
Despite this strong showing, the Fed’s December policy update—hinting at only two rate cuts in 2025—dampened gold’s outlook. Prices dipped sharply following the announcement and have traded cautiously since.
Dollar Near Two-Year High as Other Precious Metals Gain
The U.S. Dollar Index weakened by 0.2% in Asian hours on Thursday but remained close to its two-year high from last month. A stronger dollar typically pressures gold prices, making it more expensive for non-dollar buyers.
Other precious metals saw gains: Platinum futures rose 0.7% to $916.65 per ounce, while silver futures climbed 1.6% to $29.715 per ounce.
Copper Supported by Dollar Weakness and Chinese PMI
Copper prices also benefited from a weaker dollar and a rise in Chinese manufacturing activity. While China’s factory output grew in December, it did so at a slower-than-expected rate, according to Caixin PMI data.
Markets are awaiting further details on Beijing’s 2025 stimulus plans, with the government signaling intentions for looser monetary policies. Benchmark copper futures on the London Metal Exchange advanced 0.9% to $8,863.50 per ton, while February copper futures gained 0.7% to $4.0492 per pound.
