Gold Edges Higher on Geopolitical Tensions, Central Bank Demand

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Gold prices (XAU/USD) show modest gains, hovering around $2,625 during the early Asian session on Thursday. Support for the yellow metal comes from uncertainties surrounding Donald Trump’s tariff policies, geopolitical risks, and strong central bank demand. However, the US Federal Reserve's cautious approach may limit further price increases.  

Traders are looking for new developments to shape the Fed's interest rate outlook for the year. In December, Fed Chair Jerome Powell adopted a careful tone on additional rate cuts following a 25 basis points (bps) reduction. This stance could lend strength to the US dollar, potentially weighing on gold prices, which are denominated in USD.  

Upcoming economic data, such as the US weekly Initial Jobless Claims report on Thursday and the S&P Global Manufacturing PMI for December on Friday, may provide further insights into the US economy.  

Meanwhile, uncertainties tied to President-elect Donald Trump’s policies, along with persistent geopolitical tensions in the Middle East and the Russia-Ukraine conflict, are expected to sustain demand for safe-haven assets like gold.  

Additionally, growing gold purchases by global central banks could support further price gains. A survey by the World Gold Council indicates that major central banks are likely to increase their gold holdings over the next year, adding to the upward momentum for the precious metal.

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