Investing.com–Gold prices rose slightly in Asian trading on Thursday, extending strong performance from 2024, as a weaker US dollar provided support, while traders remained cautious given the US Federal Reserve’s projection of fewer interest rate cuts this year.
rose 1.2% to $2,654.24 per ounce, while the February expiring value was 1.1% higher at $2,669 per ounce at 1540 ET (08:40 GMT).
Gold ends 2024 with strong gains, while 2025 outlook is bleak versus Fed rate outlook
The yellow metal rose 27% in 2024, marking its best year since 2010, helped by the Fed’s excessive rate cuts the previous year and geopolitical tensions around the world.
When interest rates are low, the opportunity cost of holding gold decreases compared to interest-bearing assets such as bonds or savings accounts. As a result, investors typically allocate more capital to gold as a store of value and protection against uncertainty.
While gold prices rose for most of the year, the December Fed meeting acted as a shock as it announced only two rate cuts in 2025.
Gold prices fell sharply after the Fed meeting and have seen moderate moves since then, reflecting a cautious outlook for next year.
The US dollar jumped to a two-year high on Thursday on the first trading day of 2025. The dollar index last traded 0.77% higher that day at 109.38. These were also higher.
With fewer rate cuts expected in 2025, the dollar has continued to appreciate, putting pressure on gold.
A stronger dollar weighs on gold prices as it makes the yellow metal more expensive for buyers using other currencies.
Copper rises based on Chinese PMI data
Among industrial metals, copper prices were higher on Thursday as a rise in monthly Chinese factory activity provided support.
grew in December, but at a slower-than-expected pace, Caixin PMI data showed on Thursday.
The data shows that the impact of the recent stimulus measures is waning. Markets are waiting for more clarity on Beijing’s stimulus plans for the coming year, while the government has announced a looser monetary policy in 2025.
The benchmark on the London Metal Exchange rose 0.9% to $8,863.50 a tonne, while February rose 0.7% to $4.0492 a pound.
