As the event filled trading year of 2024 draws to a close, gold prices remained almost unchanged on Tuesday (December 31), with a monthly drop of over $40. However, gold has performed exceptionally well this year, achieving its best annual increase in over a decade.

Citibank has lowered its expectations for gold ETF inflows and remains cautious about the decline in gold prices.

On the last trading day of the year, trading activity is expected to remain light. If there is no miraculous reversal in the last two days, gold will close lower in December. This is somewhat unusual, as gold typically has a strong seasonal upward momentum in December, and has been rising every December since 2016.

It is not difficult to understand why gold fell in December this time: the Federal Reserve adopted a hawkish stance, the US dollar strengthened, and the bond market fell. For example, gold priced in Japanese yen has risen by 3.4% this month.

However, for gold bulls, there is still a lot of good news this year, with gold prices rising by 26.5%, the best performance since 2010.

Tim Waterer, Chief Market Analyst at KCM Trade, said, "Gold has performed well in 2024, and this increase is mainly based on expectations that the Federal Reserve will enter a lower interest rate environment

This year, central bank purchases, loose policies, and geopolitical tensions have driven gold prices to multiple record highs, and gold is expected to see its best annual performance since 2010, rising more than 26% since the beginning of the year.

The market is now waiting for a series of new catalytic factors, including next week's release of US economic data that may affect interest rate expectations for 2025, as well as President elect Donald Trump's tariff policies.

For 2025, "the outlook for US interest rates will continue to be the main driver of gold prices. Trump's trade policies will have a significant impact on inflation, the trajectory of the Federal Reserve's interest rates, and gold prices," Waterer said.

Federal Reserve policymakers this month lowered their 2025 interest rate forecast from 100 basis points to 50 basis points, and Chairman Powell stated that further rate cuts depend on progress in further reducing inflation.

Looking ahead to 2025, I believe the trend of gold is bullish, and it is basically favorable for gold. I believe it will once again challenge historical highs, "said Kyle Rodda, a financial market analyst at Capital.com.

Forexlive pointed out that perhaps another good sign is that gold has rebounded strongly after the past two December declines: rising 6.6% and 5.4% in 2015 and 2016, respectively.

Technically speaking, after experiencing a significant increase since March, gold is currently undergoing some consolidation.

From a fundamental perspective, the most important driving factor at present is that the People's Bank of China has resumed purchasing gold. It is expected to receive an update on the purchasing situation for December around January 7th, which will be an important signal if China continues to make purchases.

In addition, the market will also pay attention to the dynamics of Russia and whether Trump has the possibility of ending the Ukraine war (which currently seems unlikely).