Gold prices edged up on Monday as investors looked for more clues on the U.S. Federal Reserve’s interest rate path and President-elect Donald Trump’s tariff policies.
In the UAE, gold rates remained largely steady, with 24-carat gold and 22-carat gold remaining unchanged at AED317.5 and AED294, respectively. In addition, 21-carat gold dipped AED0.25 to AED284.5 while 18-carat gold remained at AED244.
Globally, spot gold rose 0.08 percent to $2,624.36 per ounce, as of 6:09 GMT. Meanwhile, U.S. gold futures gained 0.15 percent to $2,635.82.
The dollar index was down 0.01 percent to 107.99, making bullion more attractive for other currency holders.
Gold to remain supported in 2025
The dollar index has been largely flat, slightly below its highest level since November 2022 which helped gold prices maintain their recent gains. Gold prices have risen over 27 percent this year and are set for their best performance since 2010, driven by major interest rate cuts and heightened geopolitical uncertainties. Bullion rose to an all-time high of $2,790.15 on October 31, fuelled by significant Fed rate easing, including an outsized rate cut in September.
Geopolitical tensions also played a major role in gold’s rise this year and will likely remain a supportive factor in 2025 as Trump’s administration takes office. Heightened geopolitical risks stemming from the prolonged Russia-Ukraine conflict and ongoing tensions in the Middle East will continue to support gold prices in the upcoming year. Gold prices will likely remain steady amid lower trading volumes during the holiday season.
Markets await Trump’s return to the White House
Markets are now awaiting major U.S. policy shifts, including potential tariffs, deregulation and tax changes in 2025 whenTrump returns to the White House in January. Traders expect Trump’s expansionary policies to rekindle inflationary pressures and push the central bank to adopt a less dovish stance which might limit gains for gold prices.
Trump pledged to impose big tariffs against America’s three biggest trading partners, Mexico, Canada, and China, and also threatened a 100 percent tariff on ‘BRICS’ nations. A renewed trade war with key players like China could disrupt global commerce, create supply chain bottlenecks and increase costs for consumers and businesses.
Another key promise under Trump’s campaign was rolling back green regulations that currently slow oil and gas drilling and coal mining. If enacted, these deregulatory measures may boost shares in the traditional energy sector, reversing the gains made under the previous administration’s climate policies.
Fed to cut rates twice in 2025
The Fed cut its benchmark interest rate by a quarter point at the December meeting, raising the total rate cuts this year to 100 basis points. However, the central bank hinted at fewer cuts in 2025 with the the latest Dot Plots indicating only two rate cuts next year. Higher rates reduce the non-yielding asset’s appeal.
Recent U.S. economic data indicated a strong labor market, placing potential pressure on the Fed to maintain interest rates. Inflation edged higher to 2.4 percent year-on-year in November from 2.3 percent during the same period last year. Recent data released also revealed that the U.S. economy grew faster than expected in the third quarter, reinforcing expectations that the central bank will take a cautious approach to policy easing.
Read: UAE gold prices rise AED1, global rates set for weekly gain
Other precious metals
As gold prices rose, the precious metals market saw positive movement on Monday. Spot silver gained 0.04 percent to $29.38 while platinum rose 0.04 percent to $919.98 after hitting over a three-month low on Friday. In addition, palladium gained 0.32 percent to $914.53.
