Gold prices gained on Tuesday, the last trading day of a record-breaking year that drove the metal to its best annual performance since 2010 on robust central bank buying, geopolitical tensions, and monetary policy easing by major global banks.
Spot gold rose 0.3% to $2,614.23 per ounce, as of 0807 GMT. U.S. gold futures added 0.3% to $2,626.20.
"Gold enjoyed a stellar year in 2024 and much of that move higher was predicated on the expected transition towards a lower interest rate environment," said Tim Waterer, chief market analyst at KCM Trade.
As one of the best-performing assets of 2024, bullion has gained more than 26% year-to-date, the biggest annual jump since 2010, and last scaled a record high of $2,790.15 on Oct. 31 after a series of record-breaking rallies throughout the year.
The market now awaits a fresh set of catalysts, including a slew of U.S. economic data due next week that could influence the Federal Reserve's interest rate outlook for 2025, and President-elect Donald Trump's tariff policies.
For 2025, "the U.S. interest rate outlook will remain a primary driver of the gold price. Trump's trade policies will be key in shaping the inflationary picture, the Fed's interest rate trajectory, and in turn, the gold price," Waterer said.
The Fed aggressively cut rates in September, November and December, but in their last meeting flagged fewer rate cuts for 2025. Other major central banks also signalled caution over their 2025 trajectory.
"Gold is likely to remain supported in 2025 by rising geopolitical risks, trade tensions and ongoing demand from central banks offsetting the headwinds from the stronger U.S. dollar and a slower pace of easing by the Fed," said Aneeka Gupta, director of macroeconomic research at WisdomTree.
