Kitco: Gold Trades Under Pressure as Investors Digest Fed Policy Modification

The Federal Reserve shifted its stance in December, leading to some slight market turmoil. The central bank will slow its pace of interest rate cuts in 2025, citing uncertainty. In the meantime, inflation data shows that inflation is still down overall, but remains “sticky.”

These two events should be good for gold. The metal tends to hold its purchasing power over time. And if inflation kicks higher, gold prices should move higher as well.

Instead of seeing support, however, gold prices have dropped. In the short-term, that may relate to moves in the U.S. dollar index, which tended higher.

Markets are more focused on the direction of interest rates, rather than absolute levels. A slowdown in interest rate cuts suggest that markets may be nearing a neutral level for rates soon.

If that’s the case, then other factors may be at play for gold in 2025, following its strong performance in 2024.

Changes in the economy, which could be impacted by tariffs, could see a slowdown that takes asset prices lower. Any response to that slowdown would likely be inflationary, and then push gold higher.

For now, gold remains in an overall uptrend, even if gold-related stocks have been more mixed. If signs get more bullish overall, gold stocks may be able to stage a strong rally in 2025.

To read the full analysis on gold’s latest moves, click here.