Gold prices bounced back early Tuesday after finding support near the $2,600 mark, following two consecutive days of losses. Amid subdued trading activity ahead of the New Year holiday, the price of gold (XAU/USD) steadied around $2,620, posting modest daily gains.
Market Dynamics
Spot gold briefly dipped below $2,600 during the American trading session, retreating further from Friday’s high of $2,638. Market sentiment largely dictated price movements, with the US Dollar gaining strength after Wall Street’s opening. Weak performance across major stock indexes drove short-term demand for the greenback, amplifying downward pressure on gold.
Thin trading volumes in the final days of the year magnified the decline in equities, but despite recent turbulence, the three major indexes remain on track to close the year with significant gains.
GOLD DAILY CHART
Broader Economic Outlook
Investors appear cautious as uncertainty looms over the economic landscape in 2025. The Federal Reserve recently signaled a slower pace of interest rate cuts, citing persistently high inflation. Additionally, the upcoming return of former President Donald Trump to the White House on January 20 has heightened concerns over potential protectionist policies, which could fuel further inflationary pressures.
As the year winds down, the combination of tightening monetary policy and geopolitical shifts is steering investors toward safe-haven assets like gold, even as short-term fluctuations continue.