(Bloomberg) — Gold edged higher after notching its biggest annual gain since 2010, with traders assessing prospects for a slower pace of monetary easing by the Federal Reserve in 2025.
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Bullion was trading near $2,633 an ounce following its 27% gain in 2024, which was driven by the Fed’s rate cutting cycle, sustained haven demand and a wave of purchases by central banks.
“Despite the Fed’s cautious tone, sustained buying by central banks and geopolitical uncertainties are expected to keep gold in focus as a preferred safe haven asset,” Kaynat Chainwala, an analyst at Kotak Securities, wrote in a note.
Investors are now focused on the rate path in the US, after Chair Jerome Powell last month signaled greater caution over how quickly the central bank can continue reducing borrowing costs amid renewed concerns about inflation. Lower rates are typically positive for bullion, which doesn’t pay interest.
Key economic data due later this week, including US jobless claims and manufacturing reports, will be closely watched for clues on the Fed’s easing trajectory.
Spot gold rose 0.4% to $2,634 an ounce at 7:38 a.m. in London. The Bloomberg Dollar Spot Index declined. Silver, palladium and platinum all rose.
–With assistance from Preeti Soni.
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