December 30, 2024
New Delhi, India
Gold Prices (XAU/USD)
Gold prices (XAU/USD) rebounded on Monday, recovering losses from the previous session as lighter trading volumes prevailed ahead of the New Year holiday. The safe-haven appeal of gold strengthened amid heightened geopolitical risks and anticipation of economic policies under the incoming Trump administration.
Geopolitical Tensions Boost Gold Demand
The prolonged Russia-Ukraine conflict and escalating tensions in the Middle East have added to the risk-averse sentiment. On Sunday, Israeli forces launched attacks on two hospitals in northern Gaza, killing seven and injuring others. Such developments have further bolstered gold’s appeal as a safe-haven asset.
Economic Policies and Fed Outlook
Markets are closely watching potential trade tariffs and policies from the incoming US administration, which could spark trade conflicts and enhance risk aversion. However, the Federal Reserve’s cautious stance on rate cuts in 2025 may limit gold’s upside potential. The Fed recently cut its benchmark rate by 0.25% and signaled only two rate cuts for the coming year.
Gold’s Record Year
Gold is on track to close 2024 with an exceptional 27% annual gain, marking its best performance since 2010. Central bank purchases, rising geopolitical tensions, and monetary easing policies have driven this rally.
US Dollar and Bond Yields
The US Dollar Index (DXY) trades near 108.00, slightly below its November 2022 peak, while US Treasury bond yields are weakening, with 2-year and 10-year yields at 4.32% and 4.62%, respectively. The depreciation in bond yields has further supported the non-yielding yellow metal.
Source: FXStreet
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