Gold edged lower in light trading on Friday and was poised for a weekly gain, as investors awaited cues on the US economy to anticipate the Federal Reserve’s interest rate path for 2025 and the incoming Donald Trump administration’s policies.
Spot gold fell 0.2% to $2,630.28 per ounce, as of 0221 GMT. Bullion gained 0.3% so far this week. US gold futures eased 0.2% to $2,649.10.
“We are in a holiday lull so price action is a little dull, with moves perhaps exaggerated by thin liquidity,” said Kyle Rodda, financial market analyst at Capital.com.
“The (rate-cut) decision shook the markets’ confidence in the number of cuts likely to come next year and that acted as a headwind for gold.”
US jobless claims fell to a one-month low last week, data showed, indicating a strong labor market and potential pressure on the Fed to maintain interest rates.
After aggressively cutting rates in September and November, the Fed persisted with easing in December but hinted at fewer reductions in 2025.
Gold prices have surged nearly 28% this year, reaching a record high of $2,790.15 on Oct. 31, driven by Fed’s substantial rate cuts and escalating geopolitical tensions. On the geopolitical level, Israel struck multiple Houthi targets in Yemen on Thursday, including the Sanaa International Airport, resulting in at least six deaths according to the Houthi media.
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Gold is considered a hedge against geopolitical turmoil and inflation, but higher rates reduce the non-yielding asset’s appeal.
Markets are preparing for major policy shifts, including tariffs, deregulation and tax changes, in 2025 as Donald Trump returns to the White House in January.
Spot silver fell 0.2% to $29.75 per ounce and palladium shed 0.3% to $922.58, while platinum added 0.1% to $936.85.
All three metals were headed for weekly gains.
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