The price of gold rose slightly in lackluster trading in a holiday-trimmed week. The precious metal is supported by the continuing uncertainty regarding Donald Trump's policy, as well as expectations of a moderate easing of the Fed's monetary policy in 2025.
Meanwhile, further price increases were limited by the strengthening of the US currency. The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.12% to 108.16, which is not far from the two-year high reached on Friday. Since the beginning of December, the index has gained 2.3%.
As for the Fed's policy outlook, markets are now pricing in just about 35 basis points of easing for 2025. According to the CME FedWatch Tool, markets see an 8.6% probability of a 0.25% rate cut in January (compared to 16.8% a week ago). Higher rates dull the non-yielding bullion's appeal.
The next important catalyst for gold will be Donald Trump's policy on trade tariffs and how the targeted trade partners react to it. Overall, American investors are preparing for a number of changes in 2025 - from tariffs and deregulation to tax policy - that will affect markets when Trump returns to the White House in January.