Gold is headed for its best year since 2010

Gold prices gained in holiday trading, while investor attention was focused on the Federal Reserve’s rate strategy for next year and Trump’s future tariff policies. Spot gold gained 0.2% to $2,616.99 an ounce. US gold futures are up 0.2% at $2,632.20. After cutting rates aggressively in September and November this year, the Fed continued with cuts in December but hinted at tapering rates in 2025.

Central bank buying, easing monetary policy and geopolitical tensions have pushed bullion to hit record highs several times this year, putting it on track for its best year since 2010, up 27% so far. Friday’s benign U.S. inflation reading eased concerns about the pace of cuts next year. However, markets continue to expect easing of just 35 basis points by 2025.

“Gold could reach $3,000 in 2025 if markets stick to the metal’s role as an inflation hedge, especially if Trump’s policies reignite inflationary pressures in the US,” said Han Tan, Chief Market Analyst from Exinity Group to Reuters. US investors are preparing for a series of changes in 2025 – from tariffs, to deregulation, to fiscal policy – which will have repercussions on markets when Donald Trump returns to the White House in January.

“Gold bulls could enjoy another stellar year if global geopolitical tensions were to increase under the Trump 2.0 government, potentially pushing investors into this long-standing safe haven,” Tan added. Gold is considered a safe investment during economic and geopolitical turmoil, but rising rates increase the opportunity cost of hold this unprofitable asset.