The U.S. dollar surged after the Federal Reserve signaled a more hawkish stance on interest rates, leading to a decline in gold prices. While a stronger dollar typically puts downward pressure on gold, analysts predict gold will find support from factors like central bank and Chinese demand, as well as geopolitical tensions.
The U.S. dollar climbed following a hawkish forecast delivered by the U.S. Federal Reserve on Wednesday — while gold prices dropped. Values of the two tend to have an inverse relationship. Despite the potential for a stronger greenback in 2025, analysts told CNBC that gold prices would find strong support from factors including central bank and Chinese demand, along with wider geopolitical tensions. 'Trump tariff proposals and a more hawkish Fed do add to the downside risk for gold.
All else being equal that would lead to lower gold prices. But we expect non-traditional factors to be stronger next year,' one economist said. for the path of interest rates next year, setting gold prices up for a blow — but analysts told CNBC they still see solid support for the precious metal in 2025.The Fed's'dot plot,' a gauge of policymakers' outlook, now suggests the Fed will cut interest rates twice in 2025, compared with four quarter-point cuts previously expected in September, when concerns about the weakening labor market were front-of-mind. The big concern for the central bank is now whether the policies of incoming President-elect Donald Trump — particularly his threat of sweeping trade tariffs — will prove inflationary.jumped following the Fed news on Wednesday, with the dollar index hitting a two-year high, as the potential for higher rates was seen boosting the currency. Gold prices — which have been on a stunning run and scaled record highs this year — meanwhile tumbled 2% to their lowest level in a month.Gold is widely denominated in dollars, with a stronger greenback weighing on prices for the precious metal. Higher interest rates and higher U.S. Treasury yields also traditionally increase competition for the safe-haven asset, dampening gold demand. But these relationships have been'on and off' for the last few years, as wider factors such as demand for gold from central banks — particularly that of China — has outweighed dollar and U.S
FEDERAL RESERVE INTEREST RATES US DOLLAR GOLD PRICES GEOPOLITICAL TENSIONS
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