Fundamental factors that support the gold price
Gold thrives in low interest rate environments and benefits from economic instability. Traders are positioning themselves ahead of crucial U.S. economic data, including job openings, ADP employment numbers and the minutes of the December Fed meeting. These indicators will shape expectations for central bank policy in 2025.
In 2024, gold posted a stellar performance with an annual gain of more than 27% – its best year since 2010. This rise was driven by expectations of interest rate cuts, central bank buying and geopolitical risks. Analysts suggest a price target of $3,000 per ounce remains plausible, with corrections early in the year potentially paving the way for further upside momentum.
The expiration of the ‘Trump trade’, which initially boosted the US dollar and stocks, could benefit gold. Trump’s proposed tariffs and protectionist policies could create inflationary pressures and trigger trade disputes, both of which are historically bullish for gold.