The financial markets continue to exhibit volatility with low trading volumes following the Christmas holidays. The price of gold has increased as the sentiment shifts towards risk aversion ahead of the Trump administration, despite the prospect of limited interest rate cuts from the Federal Reserve in 2025 posing challenges for gold prices.
GOLD
Recommended
Recommended
Recommended
Recommended
Gold opened with a slight increase on Monday (30/12/24) amid reduced trading volumes post-Christmas and in anticipation of the New Year. Its rise is supported by investors closely observing U.S. economic policies under the upcoming Trump administration and interest rate outlook from the Fed for 2025.
Gold has the potential to strengthen further as demand for safe-haven assets may rise if Trump’s trade and tariff policies instigate trade tensions, prompting market participants to seek safer options. However, the expectation that the Federal Reserve may enact only modest interest rate cuts in 2025 could limit the price gains of gold, given that this metal does not yield returns like other investments.
OIL
Oil prices continued to gain traction during early Asian trading this morning, reaching $70.72 per barrel. This increase is bolstered by reports that leading European energy firms are refocusing on oil and gas for short-term profits, as the implementation of global clean energy policies slows due to soaring energy prices following Russia’s invasion of Ukraine in 2022.
Oil has also posted weekly gains, fueled by positive outlooks regarding economic recovery in China, the world’s largest oil importer, thanks to government stimulus. Despite the World Bank raising its growth projections for China for 2024 and 2025, it cautioned that weak confidence and challenges in the property sector remain significant obstacles.
EURUSD
The EURUSD pair managed to sustain its upward trend ahead of the European trading session today, marking its third consecutive day of gains, trading around 1.0425. This rally is driven by comments from European Central Bank (ECB) Governing Council member Robert Holzmann.
Holzmann stated on Saturday that any future interest rate cuts by the ECB will likely take longer following recent inflation spikes. He also noted that he currently does not foresee further interest rate hikes, acknowledging that Trump’s tariffs might slow down global growth while keeping inflation pressures intact.
GBPUSD
The GBPUSD pair continued its recovery, trading around 1.2580 during Monday morning’s Asian session. This strength comes amidst uncertainty surrounding the Bank of England (BoE), where policymakers are increasingly divided over the necessity to cut interest rates to combat economic slowdowns.
The Monetary Policy Committee (MPC) of the BoE voted 6-3 to maintain interest rates, a greater split than previously expected. Trading volume remains lower than usual as New Year’s holidays approach.
USDJPY
The USDJPY pair faced limitations on its rise at Monday’s opening as the Yen strengthens on speculation that the Bank of Japan (BoJ) might raise interest rates come January, following improved Tokyo Consumer Price Index inflation data released last week.
USDJPY may further decline due to expectations that the Federal Reserve might only implement minimal interest rate cuts in 2025, which could redirect investor interest towards the Japanese Yen.
NASDAQ
The Nasdaq remains in the red at the start of trading on Monday as the holiday exuberance on Wall Street abruptly faded last Friday, leading to losses across all three major indices due to significant selling pressure, which has even impacted technology and growth stocks that previously led market gains throughout the week.
The pressure from the sell-off against Nasdaq appears to linger into the European session, suggesting that further declines may be underway.
