Today’s markets analysis on behalf of Joseph Dahrieh, Managing Principal at Tickmill
21st January 2025
Gold prices showed resilience on Monday, as the US dollar softened. Investors are closely monitoring Donald Trump’s presidential inauguration today, seeking clarity on potential policies that could impact inflation trends and influence the Federal Reserve’s monetary policy decisions. The precious metal’s market dynamics could experience heightened volatility in the initial phase of the new administration, as policy implementations might bring unexpected developments to financial markets.
Recent economic indicators have painted a nuanced picture of the US economy, with subdued core inflation readings, alongside weaker-than-anticipated producer price inflation and retail sales data. These developments have strengthened market expectations for additional interest rate cuts by the Federal Reserve this year, particularly if inflation continues to slow down. As highlighted by Fed Governor Christopher Waller’s recent comments, the Federal Reserve remains focused on monitoring inflation trends and adjusting monetary policy accordingly creating a potentially supportive environment for gold prices.
While the reduction in Middle Eastern geopolitical tensions has slightly diminished the immediate appeal of safe-haven assets, gold’s outlook remains supported by multiple factors. Continued demand from central banks is expected to provide a solid foundation for the precious metal throughout the year. Additionally, economic uncertainties persist, potentially reinforcing gold’s traditional role as a safe-haven asset, particularly if new trade tariff policies create trade disruptions.