Gold Ends Week Higher Despite Friday Dip, Driven by Safety Seeking

The Estadão news portal reports that gold prices closed lower on Friday, January 3, 2025, but ended the week with gains. Investors sought safety at the start of the year amid expectations of tensions throughout 2025.

The metal’s price for February delivery fell 0.54% to $2,654.70 per troy ounce on the Comex division of the New York Mercantile Exchange. However, it recorded a 0.87% increase for the week.

Geopolitical concerns and promised tariffs by U.S. President-elect Donald Trump pose risks after his inauguration on January 20. The Federal Reserve will likely consider the impact of these measures on inflation when setting monetary policy this year.

This consideration may influence gold prices. Alex Kuptsikevich from FxPro notes that gold and the dollar are rising simultaneously. This occurrence typically happens when stocks fall during periods of safe-haven seeking.

He states that gold and dollar prospects now depend on the macroeconomic situation, particularly the threat of trade wars. Trump has threatened to impose various tariffs on goods after taking office.

Global speculators may increase their gold purchases. They anticipate that China and other emerging markets will favor gold over dollar-denominated bonds. The market expects the Fed to maintain interest rates at its January meeting, the first of 2025.

However, uncertainty surrounds potential rate cuts throughout the year. Investors are split between expectations of one, two, or three 0.25 percentage point cuts. These differing views stem from uncertainties about Trump’s future policies.

ING, in a report, agrees with the prediction of no changes at the end of January. However, they still project a 25 basis point cut in March. The Federal Reserve’s decisions will likely impact gold prices throughout the year.

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