The gold price fell on Friday due to low trading volume after the Christmas holiday.
Near the end of the year, trading volumes tend to decrease.
Prices could rise later in the day, as yields on Treasury Bonds in the US remained subdued.
Gold prices are expected to finish the year with a sharp increase.
When bond yields drop, gold prices tend to rise as the yellow metal’s opportunity cost is reduced.
The February gold contract at COMEX closed on Tuesday, February 24th, 2012, at $2,644.01 an ounce. This is a 0.4% decrease from the previous closing price.
The next two trading days could see a price swing from positive to negative territory, as fewer economic reports are released at the end of the calendar year.
Gold price: Fed policy, rising dollar impact
Gold prices on Friday were affected by the slightly higher US dollar earlier in the day.
A stronger dollar increases the price of commodities in greenbacks for holders of currencies other than the US dollar, thus reducing demand for metals.
The recent hawkish tone from the US Federal Reserve also affected the sentiments among traders.
The US Fed reduced interest rates last week by 25 basis points, but only predicted two rate reductions next year as opposed to four.
The price of gold was affected by this, as the higher interest rates increased the value of the precious metal.
The US inflation data released last week, which showed a slight decline in inflation, has renewed hopes for further rate cuts next year.
In a recent report, Akhtar FARQUI, a forex analyst with FXstreet said that “gold, a non yielding asset, gains momentum as moderate US PCE data challenges expectations for limited Fed rate reductions next year and suggests the possibility of further reductions.”
Gold price is affected by geopolitical tensions
The Russian Federal Security Service announced on Thursday that it had foiled multiple assassination attempts by Ukrainian intelligence against high-ranking Russian officials and their families.
According to Reuters, the agency said that bombs were disguised as document folders or power banks.
Gaza’s authorities reported that five Palestinians were killed in an Israeli airstrike, and several others throughout the Palestinian enclave.
Faruqui said:
The appeal of safe havens is enhanced by the increased geopolitical risk resulting from the ongoing Middle East tensions and the long-running conflict between Russia and Ukraine.
The gold price is expected to finish the year at a gain of 27% since 2024. Gold’s annual return is the best since 2010.
Gold prices have risen by more than 30% in October since 2024. The price of gold fell in the following weeks because of a rising dollar, but it remained high.
Central bank purchases, geopolitical tensions, and central banks’ interest rate reductions all contributed to the rise in gold prices.
Gold price: Technical forecast
On Friday, gold prices hovered around $2.640 per ounce.
Prices have passed the $2,630 level, which signals a period of consolidation.
Faruqui stated in the report that:
The Relative Strength (RSI) for 14 days is hovering just below 50, reflecting a neutral mood. A move decisively above 50 could indicate increased interest in buying the commodity.
Faruqui stated that if the buying momentum increases, gold may test the $2700 per ounce mark.
Prices are still supported by $2,630 and 2,627. Faruqui stated that a break below these levels would increase the selling pressure to the monthly low price of $2,583 an ounce.
This post Gold Price Today: Yellow metal on track to best annual returns since 2010, may be updated as new information unfolds
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