Gold prices (XAU/USD) hovered near $2,640 during early Asian trading hours on Monday, as a robust US Dollar, bolstered by strong economic data, applied downward pressure on the precious metal. Investors now turn their focus to the upcoming US labor market data for December, due Friday, for further direction.
Data from the Institute for Supply Management (ISM) released last Friday revealed a rise in the US Manufacturing PMI, climbing to 49.3 in December from 48.4 in November, surpassing market expectations. The positive data strengthened the Greenback, weighing on dollar-denominated assets like gold.
The Federal Reserve’s policy stance added further challenges for gold. While the Fed enacted an interest rate cut in December, it projected fewer reductions in borrowing costs for 2025, tempering optimism for non-yielding assets like gold.
However, geopolitical and economic uncertainties continue to support gold’s appeal as a safe haven. Over the weekend, violence escalated in Gaza as Israeli forces and Hamas failed to reach a ceasefire agreement, with Palestinian officials reporting over 100 casualties from Israeli airstrikes.
Additionally, central bank purchases may provide a cushion for gold prices. Forecasts suggest that central banks will remain net buyers, purchasing approximately 8 million ounces in 2025, consistent with or slightly below 2024 levels.
Gold’s near-term trajectory remains sensitive to macroeconomic developments and geopolitical tensions, leaving investors watching for clearer signals in the days ahead.
Related Topics:
