The international spot gold market experienced a rather calm trading phase in the week from December 23rd to 27th, as holiday transactions dwindledThe week's opening price was set at $2620.49 per ounce, and the trading range varied with a peak at $2639.10 and a low of $2608.08, ultimately closing at $2622.15. This reflected a small drop of $0.64 or 0.02% for the week, with the candlestick chart showing a star formation.

Despite a recent uptick in gold prices driven by moderate U.SPCE inflation figures that bolstered expectations of Federal Reserve interest rate cuts, the market remained within a consolidation rangeThis hesitation can largely be attributed to the holiday-induced quietude, which left many traders assessing the Fed’s monetary policy outlook and its implications for gold prices.

As we transition into a new week, the golden market remains somewhat lackluster

However, all eyes will be on forthcoming economic data and signals that could influence the trajectory of gold prices moving forwardThis period in late December is traditionally marked by reduced market participation, as many traders close out positions for the year and reflect on the market's performance.

The closing days of the year suggest a brighter horizon for the gold market in 2024. Throughout the year, gold prices have frequently reached historical heights, even marking gains of over 35%. Although there has been a significant pullback from the October high of $2790.15, the year has seen an impressive increase of about 27%, positioning it for the best annual performance since 2010. Key factors behind this surge consist of ongoing central bank gold purchases, heightened geopolitical tensions, and a shift in global monetary policies from a contraction to a more accommodative stance.

Importantly, as central banks worldwide engage in a cycle of rate cuts and the financial markets experience increased volatility, the financial characteristics of gold gain prominence

For instance, on September 19, 2024, the Federal Reserve made a notable move by slashing the federal funds rate by 50 basis points—the first rate cut in four years—signaling a new phase of monetary easingSubsequent meetings in November and December resulted in additional cuts of 25 basis points each, culminating in a total reduction of 100 basis points for the year.

Additionally, the trend towards diversification of reserve assets among various countries has elevated the status of gold as a monetary assetA survey conducted by the World Gold Council in 2024 revealed that more than 80% of central banks plan to increase their gold holdings over the next 12 months, marking a historic peak in central bank gold accumulation initiatives and reflecting confidence in gold's value as a hedge against inflation and economic turmoil.

Nevertheless, as the year draws to a close, the anticipated decline in geopolitical tensions may lead to a decrease in gold's safe-haven demand

The sentiment within the market is cautiously optimistic yet wary, as investors weigh potential factors that could influence future gold performance.

Looking ahead, projections for 2025 suggest that gold could indeed challenge the $3000 per ounce markWhile new government policies in the U.Smay initially exert downward pressure on gold in the short term, the long-term outlook remains largely favorableEmerging markets are expected to enhance their gold reserves further, with room for significant growth.

Even if the Fed's rate cuts may be limited, the demand for gold as a hedge against uncertainty and currency fluctuations is anticipated to buttress its priceA stark observation of the U.Snational debt, which has eclipsed $36 trillion compared to only $907 billion 40 years ago, underscores the alarming scale of fiscal pressureThe national debt now comprises over 120% of GDP, far surpassing international benchmarks

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Economists caution that when the growth rate of debt outpaces that of GDP, the risk of prolonged economic recession intensifiesCredit rating agencies like Fitch and Moody's have already downgraded the U.Scredit rating outlook, reinforcing these concerns.

From a geopolitical standpoint, risks are expected to persist, providing ongoing support for gold pricesThe prevailing sentiment suggests that while gold could be pressured by high treasury yields in the first half of 2025, a renewed demand for safe-haven assets in the latter half may propel prices upward once again, possibly targeting that significant $3000 per ounce figure.

Regarding short-term trading sentiment, recent data has indicated decreasing positions in goldNotably, the Chicago Mercantile Exchange (CME) recorded a drop of 5,635 open gold contracts by the week ending December 20, bringing the total to 454,646, marking the second consecutive weekly decline.

In the realm of exchange-traded funds (ETFs), the world’s largest gold ETF, SPDR Gold Trust, saw its holdings decrease by 4.88 tons in the week ending December 27, resulting in a total of 872.52 tons

This figure represents a decline of 6.59 tons from the end of 2023, as investor sentiment appears to pivot cautiously as the year wraps up.

From a technical perspective, historical patterns indicate that if gold cannot close above $2635 per ounce by the end of the month, the fourth quarter may witness a bearish trendThis is particularly intriguing as, since 1996, every fourth quarter during a gold bull market concluded positivelyTherefore, a quarterly decline could imply a prolonging of the adjustment period.

As we approach the New Year, global financial markets are likely to remain relatively stableThe only economic data point to watch for is the U.SISM Manufacturing Purchasing Managers' Index (PMI), which may steal the spotlight amidst dwindling market activityPresently, gold prices are navigating crucial resistance levels between $2650 and $2670 per ounce, struggling to break the pressure zone between $2640 and $2642 on a daily basis