Gold edges higher in holiday trading, focus remains on Fed outlook

Gold prices gained in a quiet holiday-period trading on Tuesday, while investor focus was on the US Federal Reserve's rate strategy for next year and President-elect Donald Trump's future tariff policies.

Spot gold added 0.1 per cent at $2,614.66 per ounce, as of 1037 GMT. US gold futures were steady at $2,629.00.

After aggressively cutting rates in September and November this year, the Fed persisted with cuts in December but hinted at fewer reductions in 2025.

Central bank buying, monetary policy easing and geopolitical tensions have propelled bullion to multiple record highs in 2024, putting it on track for its best year since 2010 with a 27 per cent increase so far.

A benign US inflation reading on Friday eased some concerns about the pace of cuts next year. However, markets are still pricing in just about 35-basis-point easing for 2025.

"Gold could reach $3,000 in 2025, assuming markets adhere to bullion's role as an inflation hedge, especially if Trump's policies reignite US inflationary pressures," said Exinity Group Chief Market Analyst Han Tan.

US investors are preparing for a swathe of changes in 2025 - from tariffs and deregulation to tax policy - that will ripple through markets as Trump returns to the White House in January.

"Bullion bulls may enjoy another stellar year ahead if global geopolitical tensions are ramped up under Trump 2.0, potentially pushing investors towards this time-tested safe haven," Tan said.

Gold is considered a safe investment during economic and geopolitical turmoil, but higher rates increase the opportunity cost of holding the non-yielding asset.

Spot silver fell 0.5 per cent to $29.53 per ounce, platinum eased 0.1 per cent to $938.35, while palladium rose 1.4 per cent to $943.05.