Gold prices steady amid thin year-end trading, set for stellar yearly gains
2024.12.31 01:21
Investing.com– Gold prices were largely unchanged in Asian trade on Tuesday amid thin year-end trading, although they were set for stellar yearly gains helped by the U.S. Federal Reserve’s interest rate cuts this year.
was largely unchanged at $2,607.65 per ounce, while expiring in February edged 0.2% lower to $2,620.22 an ounce by 00:23 ET (05:23 GMT).
Trading in gold typically sees thin volumes and subdued prices toward the year-end as many institutional traders and market participants close their books ahead of the holiday season.
Gold set for hefty yearly gains
The yellow metal has risen more than 26% in 2024 due to the Fed’s outsized rate cuts earlier this year and geopolitical tensions around the globe.
When interest rates are low, the opportunity cost of holding gold decreases compared to interest-bearing assets like bonds or savings accounts. As a result, investors typically allocate more capital to gold as a store of value and a hedge against uncertainty.
While gold prices rose for most of the year, the Fed’s December meeting acted as a bump after it signaled fewer rate cuts in the upcoming year.
Policymakers forecasted only two more rate cuts in 2025, against precious expectations of four cuts as sticky inflation remained a major concern.
Gold prices had fallen sharply after the Fed meeting and have seen subdued movements since then, reflecting a cautious outlook for next year.
With expectations of fewer rate cuts, the dollar has strengthened further, creating pressure on gold.
A stronger dollar weighs on gold prices as it makes the yellow metal more expensive for buyers using other currencies.
Other precious metals inched lower on Tuesday. edged 0.4% lower to $913.65 an ounce, while inched down 0.3% to $29.315 an ounce.
Copper subdued even as China’s factory activity expands
Among industrial metals, copper prices were subdued as a strong dollar weighed.
The was slightly weaker in Asian trade on Tuesday but remained near a two-year high it reached earlier this month.
Data on Tuesday showed that China’s expanded for a third straight month in December as a raft of fresh stimulus measures continued to provide support.
However, the rise was slightly lower than market expectations and below the previous month’s reading.
Benchmark on the London Metal Exchange inched 0.2% lower to $8,925.50 a ton, while February were largely unchanged at $4.0885 a pound.
