Looking ahead, all eyes are on the impact of Trump 2.0 on the global economy, according to the World Gold Council.
Spot gold dived intraday on Thursday, falling back to near $2,680 per ounce, down more than 1% intraday. Spot silver also fell more than 1% intraday. Previously, the U.S. November PPI report exceeded expectations, the monthly rate recorded 0.4%, expected 0.2%, the previous value was revised from 0.20% to 0.3%; the annual rate was recorded 3%, greatly exceeding the expected 2.6%, the previous value was revised from 2.4% to 2.6%.
Nonetheless, the market’s expectations for the Fed’s December rate cut remain overwhelming. In addition, the unexpected rise in U.S. initial jobless claims last week also offset questions about the prospects for a Fed rate cut.
However, independent analyst Ross Norman (Ross Norman) warned that after gold prices have risen sharply so far this year, people may see gold traders take profits.
The World Gold Council also said on Thursday that after hitting record highs this year, the pace of gold price increases will slow in 2025.
Gold prices have risen more than 30 percent so far in 2024, but next year’s gains could be affected by variables such as economic growth and inflation, according to the World Gold Council. In its 2025 Outlook report released Thursday, the trade association said a potential trade war and a complicated interest rate outlook during U.S. President-elect Donald Trump’s second term in office could impact economic growth and hurt investor and consumer demand.
The report said, “All eyes are on the United States. A second Trump term could boost the local economy, but could equally trigger a fair degree of nervousness among global investors.”
The rally in gold prices in early 2024 has been driven by heavy purchases by central banks, especially China’s and other central banks in emerging market countries. In combination with the Fed’s recent monetary easing and safe-haven demand triggered by heightened geopolitical tensions in the Middle East and Ukraine, further boosted gold prices. However, gold price gains stalled as the dollar rallied after Trump won the election.
Some investment banks remain bullish on the outlook for gold next year, which is currently trading close to $2,700 an ounce. Goldman Sachs Group predicts that gold will reach $3,000 by the end of 2025, while UBS forecasts $2,900.
China’s actions in the gold market will be closely watched. So far, investors in the Asian nation have supported prices while consumers have remained on the sidelines, but “these dynamics depend on the direct (and indirect) impact of trade, economic stimulus and risk perception,” the World Gold Council said.
If the world sees “a significant reduction in interest rates, or a deterioration in geopolitical or financial market conditions,” gold will rise, the association said. Lower interest rates are usually good for gold because it doesn’t pay interest.
The report notes that “gold’s ultimate price performance will depend on the interplay of four key drivers: economic expansion; risk sentiment; opportunity cost; and momentum.”
