Gold price (XAU/USD) remain steady at $2,650 in the early Asian session on Monday. Strong gold purchases by central banks and rising tensions in the Middle East are supporting prices. Investors are waiting for the US December Purchasing Managers Index (PMI) report, set to be released later today, for market direction.
Central Bank Boost Gold Demand
Central banks continue to buy gold, showing its importance as a safe asset during uncertain times. For the past 15 years, central banks have been adding gold to their reserves. According to the World Gold Council, gold price may rise in 2025 due to these purchases, global tensions, and economic conditions in major markets like the US, China, and India.
Middle East Tensions Impact Gold Price
Geopolitical risks, especially in the Middle East, are pushing gold prices higher. On Sunday, Israel announced plans to double the population in the Golan Heights due to perceived threats from Syria. Any increase in regional tensions could drive more demand for gold as a safe-haven asset.
US Economy and Its Effect on Gold
The strong US economy and potential inflation are challenges for gold. President-elect Donald Trump’s tariff policies could increase inflation, delaying Federal Reserve interest rate cuts. A stronger US economy might also strengthen the US Dollar (USD), making gold less attractive since it’s priced in USD.
Carsten Menke, an analyst at Julius Baer, said, “A strong US economy may reduce the chances of rate cuts, which could limit gold’s gains.” Traders need to monitor US economic updates closely.
Federal Reserve Meeting This Week
The Federal Reserve is expected to cut interest rates by 25 basis points (bps) this week. Traders will focus on Fed Chair Jerome Powell’s comments for hints about future US monetary policy. Any sign of lower interest rates could support gold prices in 2025.
For daily updates, visit our Daily Gold Update. Check out Daily Gold Signal for more insights into gold price trends.
