Gold Prices Decline for Sixth Consecutive Day Amid Strong Dollar and Treasury Yields

Gold prices fell on Thursday, December 19, marking the sixth straight day of losses. This decline followed the Federal Reserve’s recent indication that it plans to slow the pace of interest rate cuts in 2025.

The precious metal faced significant pressure from rising long-term Treasury yields, which reached their highest levels since May, as well as from a strengthening dollar.

The February gold contract settled down 1.70%, closing at $2,608.10 per troy ounce on the Comex division of the New York Mercantile Exchange.

Following the Fed‘s decision, market participants now anticipate a cumulative reduction of only 25 basis points in the U.S. federal funds rate by December of next year.

Analysts at Peak Trading Research noted that this more hawkish stance from the central bank suggests that a strong dollar will persist until 2025, which could further hinder gold’s performance.

Looking ahead, the short- to medium-term economic outlook for the United States appears to present more challenges than opportunities for gold, potentially prolonging its current consolidation phase.

However, Julius Baer analysts suggest that a resurgence in Fed purchases could elevate gold prices in the long run. After a “brilliant” year for gold in 2024, RBC Capital Markets forecasts only modest gains for the precious metal in the coming year.

They project an average price of $2,771 per troy ounce in 2025 and $2,848 in 2026. RBC acknowledges that prices may face downward pressure if negative macroeconomic factors worsen or if uncertainty diminishes.

However, they also highlight the potential for prices to increase. This could occur if conditions lead to significant risk-off flows or stronger demand from central banks.

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