As the year draws to a close, the global gold market enters a period of relative calm, marked by a quiet trading session on December 25 due to the Christmas holidayWith much of the market in a lull, the price of gold held steady on December 24, experiencing only modest fluctuationsInvestors have been closely watching developments surrounding U.Smonetary policy, particularly the Federal Reserve's interest rate strategy and the evolving trade policy under the Biden administration, both of which could heavily influence the gold market's trajectory in the year ahead.

On Tuesday, December 24, spot gold experienced a slight gain, closing up by 0.16%, with a narrow trading range of just $11.36, finishing at $2,616.74 per ounceAccording to Zain Vawda, a market analyst at OANDA MarketPulse, this flat movement in gold prices is largely driven by the low liquidity environment typical of holiday trading sessions

"The current range-bound price action seems to be more a reflection of the reduced market activity during the holiday period," he explained.

Despite the quiet trading, the outlook for gold in 2024 remains positiveThe metal has seen an impressive 27% increase in value this year, positioning it for its best performance since 2010. Vawda points out that while the bullish trend could continue into 2025, much will depend on the geopolitical landscape"Barring any unexpected geopolitical disruptions, gold prices are expected to hover around $2,800 per ounce, driven by continued risk concerns," he said.

The expectation of continued growth for gold in 2025 is supported by several factorsAnalysts have long predicted that sustained central bank buying, escalating geopolitical tensions, and potential rate cuts from the Federal Reserve could push gold to new heightsIndeed, these forces are expected to set the stage for further price appreciation in 2025, which could mirror the gains seen in 2024.

However, there are signs that the momentum for gold could weaken as the dollar continues to strengthen

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This shift became evident in early November, when the gold rally began to slow downDespite the Fed’s aggressive rate cuts in September, November, and December, the persistent high inflation rate in the U.Shas prompted the central bank to signal a reduction in the pace of rate cuts in 2025. As a result, the dollar has gained strength, holding steady at 108.11 on Tuesday’s light holiday trading, just below its two-year high of 108.54 reached on December 20. Since late September, the dollar has risen by more than 7%, driven in part by growing expectations that the U.Seconomy will accelerate under the current policy framework, while inflationary pressures have kept markets wary about how aggressively the Fed will ease in the future.

This outlook contrasts sharply with growth expectations and rate perspectives from other global economiesThe divergence in central bank policies is widening the interest rate differential between the U.S

and other nations, contributing to the dollar’s strengthThe Federal Reserve's cautious stance, as detailed in its most recent projections, contrasts with earlier more optimistic expectations, offering a more measured and conservative view on future interest rate cutsThis caution has rippled through financial markets, raising bond yields and strengthening the dollar, which is often seen as a safe haven in times of uncertainty.

The 10-year U.STreasury yield, a closely watched indicator of investor sentiment, surged to 4.63% during Tuesday's session, reaching its highest level in seven monthsThe 10-year yield is often considered a benchmark for risk-free returns, and its movement is inversely correlated with goldWhen Treasury yields rise, the opportunity cost of holding gold increases, reducing its relative appeal to investorsThis dynamic has placed downward pressure on gold prices in recent weeks, as the strengthening dollar and rising yields have made the precious metal less attractive.

Joseph Trevisani, a senior analyst, noted that market participants are somewhat optimistic heading into the end of the year, awaiting positive developments

"Everyone's anticipating positive outcomes, and this is particularly true for the dollar," he remarked"The decline in expectations for further rate cuts has shifted the narrativeAs is well known, the most significant factor in the forex market is the interest rate structure among central banks."

Looking ahead, market activity is expected to remain subdued in the coming week, with many investors on holiday and economic data sparseAnalysts predict that the Federal Reserve’s policy decisions will remain the dominant force driving the markets until the release of the U.Semployment report on January 10. In the meantime, geopolitical developments, particularly concerning trade policy and international tensions, will continue to hold the market’s attention.

The ongoing uncertainty surrounding U.Strade policies, including potential tariff changes, tax rate adjustments, and immigration restrictions, could also add complexity to the outlook for both the dollar and gold

Investors are keenly aware that any unexpected shifts in these areas could lead to significant market movements.

In the broader geopolitical arena, developments in the Middle East have added another layer of uncertaintyOn December 24, Israel's office announced that its delegation, involved in negotiations for a ceasefire in Gaza and the exchange of hostages, would return to Israel that eveningThe delegation is set to hold further discussions with Israeli government officials on the details of the negotiationsAny escalation or resolution of these issues could have far-reaching implications for global markets, influencing investor sentiment and potentially altering the trajectory for gold and other commodities.

As 2025 approaches, investors and analysts alike are bracing for a year that could be shaped by a complex interplay of economic, political, and market forcesWhile gold has had a strong run in 2024, its performance in the coming year will likely depend on the direction of U.S