On Wednesday (December 25), the Gold market is closed for the Christmas holiday; gold prices remained stable on Tuesday amid light holiday trading, as investors projected the Fed's interest rate strategy and President-elect Trump's tariff policies, which could impact the price of gold next year.

Spot gold fluctuated in a narrow range on Tuesday, closing up 0.16% at $2616.74 per ounce, with the day's range only 11.36 dollars.

Zain Vawda, a market Analyst at OANDA MarketPulse, said: "The current sideways trend seems primarily driven by a low liquidity environment."

Gold has achieved remarkable results in 2024, expected to record the best performance since 2010 with a 27% increase.

"A similar surge may occur in 2025, but this largely depends on geopolitical developments," Vawda added: "Unless there are unexpected geopolitical disruptions, under the influence of persistent risks and trade war concerns, it is expected that the fundamental scenario will see gold prices around $2800 per ounce."

Analysts had predicted that continuous historical highs in 2024, driven by central bank buying, escalating geopolitical tensions, and Fed rate cuts, would lay the foundation for a similar surge in 2025.

However, as the dollar strengthened amid "Trump frenzy," the momentum for gold began to weaken in early November. Despite the Fed aggressively cutting rates in September, November, and December, the Fed has indicated it will reduce the frequency of rate cuts in 2025 due to persistent high inflation.

The dollar remained firm in thin holiday trading on Tuesday, closing at 108.11, not far from last Friday's two-year high of 108.54, as expectations of a slower pace of interest rate cuts by the Federal Reserve compared to other global central banks continued to influence market direction.

Since the end of September, the dollar has risen more than 7%, partly due to growing market expectations that the US economy will accelerate under President Trump's policies, while rising inflation has suppressed market expectations regarding how aggressively the Federal Reserve will cut rates.

These expectations for the USA stand in stark contrast to growth forecasts and interest rate views of other global economies and central banks, leading to a widening interest rate differential.

The Federal Reserve's anticipated interest rate path from last week was more cautious than the market expected, which again boosted US Treasury yields, with the 10-year Treasury yield reaching a seven-month high of 4.630% at one point during trading on Tuesday. Historically, the yield on US Treasuries is seen as a risk-free return, representing the opportunity cost of holding Gold, and an increase in this yield would dampen the appeal of Gold.

Joseph Trevisani, a senior Analyst at FX Street in New York, said: "The election gives the market a bit of a Christmas bonus feeling, as they are all looking forward to positive things. Of course, this is also true for the dollar, as we have seen expectations for further interest rate cuts recede, and it is well known that the most important factor in the Forex market is the interest rate structure among central banks."

As the year comes to a close, trading volume may be sparse next week with limited economic data, and Analysts expect rates to be the main driver of the market before the US employment report is released on January 10. Furthermore, investors need to continue monitoring the geopolitical situation and news related to Trump.

Trump's return to the White House has brought uncertainty regarding how his anticipated tariffs, low tax rates, and immigration restrictions will affect policies.

The Russian Defense Ministry reported on the 24th that over the past day, Russian Aviation and artillery struck 146 areas where Ukrainian forces and military equipment were concentrated. The Russian air defense system intercepted 4 "HIMARS" rockets and shot down 65 Drones. In addition, the Russian military also targeted several Ukrainian military airports, weapon ammunition depots, and Drone storage facilities.

On the same day, the General Staff of the Armed Forces of Ukraine reported that by the afternoon of that day, 179 battles had occurred in the frontline areas, and the Ukrainian military continued to take all measures to prevent the Russian military's advance. Fighting is still ongoing in some areas. The report stated that in the Kursk region, the Ukrainian forces repelled multiple attacks by the Russian military.

On the evening of December 24 local time, the Israeli military bombed a house in the Beit Hanoun area of northern Gaza Strip, resulting in three deaths and several injuries.

The Israeli Prime Minister's Office announced on the evening of the 24th local time that the Israeli delegation participating in the negotiations for a ceasefire and the exchange of hostages in Qatar would return to Israel that evening and have internal reviews and discussions with the senior government officials regarding the details of the negotiations.

(Spot gold daily chart, source: E-Huitong)