Gold prices plunged to a one-month low after the Federal Reserve's latest interest rate decision and indications of a gradual easing policy. Despite a rebound exceeding 1%, gold remains under pressure due to the Fed's hawkish tone, which has dampened expectations for a rapid rate-cutting cycle in 2025.
Today, gold prices plummeted to a new one-month low before rebounding by more than 1% as investors analysed the Federal Reserve 's most recent interest rate decision and indications of a progressive easing policy in the coming year. Spot gold increased by 1.1% to $2,617.14 per ounce, marking its highest level since November 18, while U.S. gold futures declined by 0.8% to $2,631.10.
Simultaneously, the metal is anticipated to receive some support from bargain hunters at the $2,500 level. Investors seeking to capitalise on perceived undervaluation have historically shown an increased interest in purchasing at such psychological price points. Nevertheless, the bullish trajectory of gold is still unlikely to be sustained in the near term, as the broader macroeconomic environment remains unfavourable.
Reduced Geopolitical Tensions: The geopolitical landscape may undergo a transformation towards decreased tensions as Donald Trump assumes office in January. Throughout history, gold has prospered amid periods of geopolitical unrest, as investors seek refuge in safe-haven assets. The appeal of gold as a crisis hedge may be diminished if tensions subside under the new administration.
Furthermore, the price of gold in the concluding weeks of the year may be influenced by seasonal factors. Reduced trading volumes are frequently observed during the holiday season, which can exacerbate price fluctuations. Although this presents opportunities for short-term gains, it also introduces increased volatility, necessitating that traders exercise caution.
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