On Thursday (January 2nd) morning trading in the Asian market, spot gold fluctuated narrowly and is currently trading around $2623.38 per ounce. On Tuesday, the gold price closed up 0.72% at $2624.28 per ounce, helping the gold price rise by 27% in 2024, setting a record for the largest annual increase since 2010, driven by safe haven demand and interest rate cuts by central banks around the world; However, market sentiment may become more cautious, depending on policy changes during Trump's second term as president. In addition, the US dollar index hit a two-year high on Tuesday, and the 10-year US yield saw its best annual increase in two years, raising concerns about gold being blocked.

Japan and New Zealand will continue to be closed on Thursday, which may limit trading space in the Asian market. European and American markets have generally resumed trading. This trading day, the final value of the January manufacturing PMI for European and American countries will also be released. Investors need to pay attention, with a focus on the changes in the number of unemployment claims in the United States for the week ending December 21. Also, pay attention to news related to the geopolitical situation.

The strong purchases by the central bank, geopolitical uncertainty, and loose monetary policy have driven safe haven gold to record highs in 2024, reaching a historic high of $2790.15 on October 31st.

Analysts predict that the factors supporting gold prices in 2024 will continue into 2025, but they also mentioned potential resistance that Trump's policies may bring, which could stimulate inflation and slow down the pace of the Federal Reserve's interest rate cuts.

Nicky Shiels, head of metal strategy at MKS PAMP SA, said, "Gold is in a long-term bull market, but the trend in 2025 will not be as one-way as in 2024

Silver also recorded its best year since 2020, with a cumulative increase of nearly 22% in 2024. Platinum and palladium experienced annual declines, with declines exceeding 8% and 17% respectively.

Citibank's Mulqueen believes that silver prices will rise to $36 per ounce in response to a huge market shortage and the Federal Reserve's interest rate cut in 2025. He pointed out that due to the unfavorable factors of industrial demand growth in 2025, it is expected that the performance of silver will not surpass that of gold.

The US dollar index rose 0.41% to 108.43 on Tuesday, and briefly touched 108.58 during trading, the highest level since November 2022. The US dollar has achieved annual gains against almost all major currencies, with an annual increase of about 7%, as the Federal Reserve will maintain interest rates higher than other central banks, leading to the US dollar leading other currencies.

Due to the inflation rate still exceeding the Fed's annual target of 2%, traders have adjusted their expectations, believing that the Fed will take a slow and cautious approach to further rate cuts next year.

Analysts also expect that President elect Trump will introduce policies including relaxing corporate regulations, reducing taxes, imposing tariffs, and cracking down on illegal immigration to promote economic growth and increase price pressure next year. This led to higher yields on US treasury bond bonds and increased demand for US dollars. However, the outlook for Trump's policies also tends to boost safe haven sentiment, providing support for gold prices, which is also the reason why gold prices closed higher on Tuesday following the US dollar.

Lee Hardman, Senior Monetary Analyst at Mitsubishi UFJ Financial Group, said, "US Treasury yields have been adjusted to higher levels to reflect the inflationary impact that the incoming Trump administration's policy agenda may bring, including raising tariffs, tightening immigration policies, and maintaining loose fiscal policies

The weak growth prospects outside the United States, escalating geopolitical tensions in the Middle East, and the ongoing Russia Ukraine conflict have increased demand for the US dollar this year.

Action Economics analysts stated in a report that the US dollar has been boosted by "increased concerns about growth in other regions amid geopolitical risks.

The yield of US treasury bond bonds turned up in light trading on Tuesday, reversing the downward trend for most of the session. On the last day of 2024, investors had little confidence in any direction of the market while waiting for the change of the incoming Trump government. Wednesday is New Year's Day and the bond market is closed.

Before the latest price drop, market participants had been buying treasury bond, because the sharp selling this month pushed the benchmark 10-year yield to a six-month high a few days ago.

The yield on the 10-year US treasury bond bond rose 3.4 basis points to 4.579% on Tuesday. Since 2024, the yield has risen by over 60 basis points, marking the best annual increase in two years. The yield reached 4.7390% at the end of April, the highest level in 2024.

The highest point in December was 4.641% set on December 26, a new high in over six months, as the market expects greater inflationary pressure and more tariffs and tax cuts in 2025 under the leadership of Republican President elect Trump.

With Trump's inauguration approaching on January 20, investors began to pay attention to the bond trend in 2025 when the new Republican government came into power and the expected increase in fiscal deficit led to the need to issue more treasury bond.

Torsten Slok, Chief Economist and Partner at Apollo Global Management, wrote in his daily blog on Tuesday that the term premium, which refers to the expected excess return of investors holding longer-term US bonds relative to short-term bonds, has increased by 75 basis points over the past three months.

Slok said, "In other words, the 10-year yield is an additional 75 basis points higher than what the Fed's expected changes should bring, which is likely to reflect market concerns about the sustainability of the US fiscal system

In addition, with the significant decrease in the utilization rate of the Federal Reserve's Reverse Repurchase Mechanism (RRP) and the substantial increase in the issuance of short-term bonds in 2024 (which need to be extended to longer maturities), the risk of further volatility in the interest rate market in 2025 is increasing. "

At the shorter end of the curve, the two-year yield in the United States, which is more sensitive to the outlook for policy rates, remained unchanged at 4.252%. The yield hit a two-week low of 4.217% during Tuesday trading.

At the beginning of 2024, the two-year yield was 4.328%, and at the end of the year it was 4.254%, a decrease of about 7 basis points. Given that the Federal Reserve initiated its easing cycle in September, this decline is not surprising.

According to data, after soaring 0.7% to 430.6 points in September, the housing price index of the Federal Housing Finance Agency (FHFA) rose 0.4% to 432.3 points in October, narrowing the decline in treasury bond bond yields. According to data from Action Economics, this is the fifth consecutive month of increase after being flat in May, and the index has not experienced a decline since August 2022.

In other aspects of the treasury bond bond market, the US yield curve has become steeper, with the interest margin between two-year and 10-year yields reaching 34.3 basis points, which is the steepest since May 2022. At the end of Tuesday trading, it was 32.9 basis points, and later on Monday it was 28.7 basis points.

In a loose cycle, the curve usually becomes steep as the rise in short-term yields is suppressed, typically reflecting a decrease in interest rates.

The latest interest rate futures market shows that traders believe there is an 89% chance of suspending interest rate cuts in January. According to calculations by the London Stock Exchange Group (LSEG), the expected rate cut for US interest rate futures in 2025 is only 47 basis points, meaning approximately two rate cuts of 25 basis points each.

In terms of geopolitical situation, according to Palestinian media reports, on January 1st local time, the Israeli army launched attacks on multiple areas of the Gaza Strip, resulting in at least 25 deaths.

On January 1st, the Russian Ministry of Defense announced that Russian air defense forces shot down more than 30 Ukrainian drones over Belgorod Oblast, Kursk Oblast, Voronezh Oblast, Bryansk Oblast, and Rostov Oblast on the evening of January 1st. The Russian Air Transport Agency stated that temporary control measures have been implemented at Kaluga, Saransk, Penza, and Saratov airports.

On January 1st, the Ukrainian Air Force reported that since the evening of December 31st, 2024, the Russian military has launched a total of 111 drones into Ukraine, of which 63 were shot down by Ukrainian air defense forces. On the same day, the National Bank of Ukraine announced that the roof of a building caught fire due to debris from a drone falling off, and the fire was subsequently extinguished. All operations and services of the National Bank of Ukraine are functioning normally.

In terms of economic data, at 21:30 Beijing time, the US Department of Labor will announce the number of initial jobless claims in the US for the week ending December 28th. The market expectation is 224000, compared to 219000 previously. Investors need to pay close attention to this, as if the data meets or exceeds expectations, it may be bearish on gold prices; On the contrary, if the data is worse than market expectations, it is expected to provide some upward momentum for gold prices in the short term.