Gold price is showing slight improvement, trading around $2,625 early Thursday during the Asian session. This uptick is influenced by factors like uncertainties around Donald Trump’s proposed tariff policies, geopolitical risks, and increased gold purchases by central banks. However, the Federal Reserve’s cautious approach might limit further gains for the yellow metal.
Federal Reserve’s Interest Rate Outlook on Gold Prices
Investors are closely watching for new developments that could shape the Federal Reserve’s interest rate policies this year. In December, Fed Chair Jerome Powell highlighted a reserved stance on rate cuts, following a 25 basis points reduction. This approach may offer some support to the US Dollar, which often negatively impacts USD-denominated commodities like gold price.
US Economic Indicators in Focus
The release of the US weekly Initial Jobless Claims later today is expected to provide insights into the labor market’s performance. Additionally, attention will shift to the US ISM Manufacturing PMI data for December, due on Friday. Both indicators could influence the gold market significantly.
Uncertainties Around Trump’s Policies Impact Gold
Anticipated policy changes from incoming President Donald Trump create uncertainty that could drive demand for gold as a safe-haven asset. Tariff discussions and their potential economic implications are critical areas of concern.
Geopolitical Risks and Safe-Haven Demand
Geopolitical tensions in the Middle East, coupled with the ongoing conflict between Russia and Ukraine, are expected to remain high. These factors typically boost gold’s appeal as a safe investment option during uncertain times.
Central Bank Gold Purchases
Global central banks have been increasing their gold reserves, contributing to upward price momentum. A survey by the World Gold Council revealed expectations of higher gold purchases by major central banks in the coming year, further strengthening the demand for this precious metal.
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