Gold Strives for Recovery Amid Expectations of Continued Fed Rate Cuts in 2025

Forex - Gold prices have risen as investors expect the Fed to implement less aggressive interest rate cuts next year. The price of gold increased by 0.31% to $2,619.25 per ounce. However, the price of gold has decreased by 1.1% over the past week. Since the beginning of the month, the loss stands at 1.34%, while the loss compared to the same period in November has reached 3.2%.

Investors are currently focused on how quickly or deeply the U.S. central bank will lower interest rates in 2025. The positive U.S. inflation data released on Friday has eased some concerns about the pace of next year's cuts, but the markets are still only pricing in a 35 basis point easing for 2025.

Kelvin Wong, OANDA's senior market analyst for Asia Pacific, stated that the next thing the market will be looking at is Donald Trump's trade tariff policies and how the targeted trading partners will respond to this. Wong said, "I believe trade tariffs are one of the negotiation tactics, and if trading partners do not want to buy the stick or the carrot, they may retaliate with other forms of sanctions against U.S. products, which could lead to volatility in the markets and potentially increase the safe-haven demand for gold."

Analysts are targeting $2,676 for gold in the short term. If this target is reached, the new target could be the $2,720 level. In case of downward movements, the first support level is $2,603.