The gold price forecast remains steady, trading just below $2,650 during the early Asian session on Monday. The yellow metal’s struggle comes as a stronger US Dollar (USD) exerts downward pressure following robust US economic data. Market participants now focus on the upcoming US labor market report for December, scheduled for release on Friday, for new momentum.
Influence of US Economic Data
The Institute for Supply Management (ISM) released data last Friday revealing that the US Manufacturing Purchasing Managers Index (PMI) climbed to 49.3 in December from November’s 48.4, exceeding market expectations. This strong data supported the Greenback, putting pressure on the USD-denominated gold price forecast.
Federal Reserve’s Interest Rate Outlook
In December, the US Federal Reserve (Fed) cut interest rates but signaled a slower pace of borrowing cost reductions in 2025 than previously anticipated. This hawkish stance on monetary policy continues to challenge the appeal of non-yielding assets like gold.
Geopolitical Uncertainties
Geopolitical tensions often bolster gold’s safe-haven appeal. Recent developments in the Gaza Strip, where conflicts between Israel and Hamas have escalated, add to the uncertainty. Reports indicate over 100 casualties due to weekend bombardments, emphasizing the ongoing instability.
Central Bank Purchases
Central banks are projected to maintain steady purchases of gold, estimated at around 8 million ounces in 2025. These sustained buying activities could lend long-term support to gold price forecast.
Outlook for Gold Traders
While gold faces headwinds from a strong USD and the Fed’s cautious rate policy, geopolitical risks and consistent central bank purchases provide a counterbalance. Traders await December’s US labor market data for insights into the economy’s health and potential implications for monetary policy.
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