From Financial Modeling Prep: 2024-12-19 02:00:42

Gold prices rebounded after hitting a one-month low despite the Fed’s 25 basis point rate cut, reaching $2,618.11. Futures dropped 1.2% due to concerns over future rate adjustments. The Fed’s hawkish tone signals only two more rate cuts in 2025, down from earlier projections of four, to combat persistent inflation.

UBS strategists anticipate central banks’ continued gold accumulation in 2025, with global net purchases reaching record levels in 2024. Investor demand for gold as a hedge against inflation and geopolitical tensions remains strong, with UBS forecasting 900 metric tons of gold purchases in 2025.

While the Fed’s actions may boost gold prices in the short term, the cautious approach to rate cuts could temper future demand for gold as a safe haven asset. Gold’s role as a hedge against inflation remains uncertain amidst a more measured monetary policy approach and economic stabilization.

In the long term, gold’s growth potential may be limited by the Fed’s slower pace of rate cuts. While gold remains a valuable asset in portfolios, its safe-haven appeal could diminish as economic conditions stabilize and equities become more attractive.



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