Gold prices are expected to remain volatile in 2025, influenced by a combination of factors including potential Federal Reserve rate cut slowdowns, geopolitical instability, and continued Chinese central bank purchases.
Gold traders are bracing for a volatile 2025, navigating a potential slowdown in Federal Reserve rate cuts against persistent geopolitical instability and the ongoing prospect of continued Chinese central bank buying. Gold prices have inched up since the beginning of the year, currently trading around $2,650/oz, a 1.6% increase since January 1. Recent support stems from fluctuations in the US dollar, fueled by uncertainty surrounding the new US President Donald Trump's stringent tariff plans.
However, a significant boost for gold originates from reports indicating continued Chinese central bank purchases in December, following their return to the gold market in November after a six-month hiatus. Bloomberg reports the People's Bank of China's (PBoC) bullion reserve reached 73.3Moz in December, a 300,000oz increase. 2024 witnessed a stellar performance for gold prices, repeatedly shattering all-time highs and closing the year with a 27% surge. Gold breached the US$2,500/oz mark in August, peaking at $2,790.07/oz in October. 'The rise was driven by a confluence of global factors that reinforced gold's enduring position as a safe-haven asset,' stated Paul Williams, managing director of precious metal bar and coin dealer. 'Despite the Fed halving its forecast on the scale of rate cuts in 2025, the primary demand or price drivers that propelled gold to record highs throughout 2024 are likely to persist this year.' An increasingly volatile geopolitical landscape, marked by the ongoing conflict in Ukraine and mounting tensions in the Middle East, provided additional support in 2024. 'Gold is perceived as a reliable reserve asset, and numerous global central banks augmented their gold holdings during 2024,' Williams remarked. 'Nations like China, Russia, and Turkey expanded their gold reserves, aiming to lessen their reliance on the US dollar amidst a growing trend towards de-dollarization.' 'This trend appears poised to continue, or even intensify, as more banks diversify away from US treasuries, potentially providing further upward momentum for gold.
GOLD FEDERAL RESERVE Geopolitical Instability CHINESE CENTRAL BANK DE-DOLLARIZATION
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