Gold spot prices climbed by 0.32%, or $8.36, reaching $2,630.36 per ounce as of [11:55 am PST]. This marks the highest level since November 25, recovering from the previous day’s close of $2,623.61 per ounce. However, gold futures saw a slight dip of 0.27%, landing at $2,674.8.
Gold Prices Recover Amid Fed’s Cautious Approach
Spot gold gained in light trading on Monday, driven by investors covering their short positions. This rebound followed a recent dip to one-month lows after the U.S. Federal Reserve maintained a cautious stance on future rate cuts for 2025.
The Federal Reserve’s decision to implement a 25-basis-point rate cut on December 18, coupled with conservative economic projections, contributed to last week’s gold price decline. These developments underscore reduced expectations for significant rate cuts in 2025.
Market Factors Supporting Gold’s Rise
Ajay Kedia, director at Kedia Commodities in Mumbai, noted, “Gold’s recovery has been influenced by short-covering and technical support, especially as the market transitions into holiday mode.”
Additional factors bolstering gold included a softer U.S. dollar and declining Treasury yields. Economic data released on Friday hinted at a slowdown in inflation, further supporting gold prices. Monthly inflation in the U.S., measured by the Personal Consumption Expenditures (PCE) index, rose by just 0.1% in November following a 0.2% increase in October.
Fed Policymakers’ Outlook
San Francisco Fed President Mary Daly, along with other policymakers, indicated a deliberate approach to resuming rate cuts in the upcoming year. They emphasized that the “recalibration phase” had ended, signaling cautious optimism moving forward.
However, higher interest rates continue to limit the appeal of non-yielding assets like gold, highlighting the market’s sensitivity to rate-related announcements.
Broader Market Movements
Michael Langford, Chief Investment Officer at Scorpion Minerals, pointed out potential volatility stemming from the upcoming U.S. presidential term. He noted that early decisions by the new administration might heighten market volatility and drive up gold prices.
Meanwhile, data from December 17 revealed that COMEX gold speculators reduced net long positions by 16,251 contracts to 203,937. Other precious metals also experienced gains:
- Spot silver rose 0.6% to $29.69 per ounce.
- Platinum increased by 0.9% to $934.38.
- Palladium remained steady at $922.04.
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