As the dawn of 2025 approaches, the gold market is experiencing a period of high volatility, with prices fluctuating in a narrow rangeReports emerging from Washington on the night of January 6 suggested that the newly elected President of the United States might adjust “universal” tariffs to focus only on critical productsThis news momentarily boosted market sentiment, leading to a dip in the dollar and a rebound in gold prices.However, the president soon denied these reports, claiming they were incorrect, which resulted in a dramatic rebound of the dollar and a subsequent retreat in gold pricesThroughout that trading day, gold experienced significant fluctuations, akin to a roller coaster ride, ultimately concluding with a slight decline; specifically, COMEX gold futures ended the session down 0.29% at $2647 per ounce

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Through all this, analysts anticipate continued volatility in the short term.

On the data front, indicators from the U.Seconomy paint a mixed pictureThe final reading of the Markit Services PMI for December stood at 56.8, which is notably the highest level in 33 months since March 2022, despite falling short of both expectations and the initial estimateMeanwhile, the employment sub-index has reportedly finished its shrinking phaseHowever, manufacturing orders dropped in November, indicating that business investments in equipment may relax in the fourth quarter.

Amidst this backdrop, analysts are looking forward to a pivotal week regarding U.Semployment dataInitial reports will reveal the JOLTS job openings for November, followed by the December ADP employment figure on Wednesday, and capped off by the non-farm payroll report on Friday

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These figures are anticipated to be the last major economic indicators before the Federal Reserve's meeting at the end of January.

According to the CME's FedWatch Tool, there is a 93.1% probability that the Federal Reserve will maintain its current interest rates in January, while the odds of a 25 basis point cut stand at 6.9%. By March, the likelihood of keeping rates unchanged drops to 57.7%, while cumulative probabilities indicate a 39.7% chance of a 25 basis point cut and a 2.6% chance of a 50 basis point reduction.

Goldman Sachs recently adjusted its price forecast for gold, primarily due to expectations that the Federal Reserve's rate cuts will be milder than previously thoughtThe investment bank has lowered its target for 2025 gold prices from $3000 per ounce to $2910 per ounce, predicting the market may not reach that $3000 threshold until the middle of 2026.

Goldman now anticipates that rate cuts this year will amount to 75 basis points, down from their earlier estimate of 100 basis points

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Their updated projections appear to be more moderate compared to current market pricing as they believe inflationary pressures are likely to easeMoreover, they are questioning whether the policies rolled out by the incoming administration will necessarily lead to higher interest rates.

Despite these revisions, Goldman concedes that gold prices are currently being supported by a decline in speculative demand alongside an increase in central bank purchases, which has stabilized gold prices within a certain range over recent monthsThe demand from central banks is anticipated to be a critical driving force for gold prices in the long term.

Analysts at JPMorgan have expressed that if U.S

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policy evolves to incorporate more tariffs, exacerbating trade tensions and increasing risks to economic growth, it could further fuel upward momentum for gold prices.

Tom Bruce, a macro investment strategist with Tanglewood Total Wealth Management, has expressed a “moderate” optimism towards gold, forecasting a price increase of about 10% in the coming year.

Bruce states that the primary short-term challenge for gold prices in 2025 will be the potential rise in real yields coupled with robust growth in the U.SeconomyThe ongoing purchases of gold by central banks create new market dynamics, as many countries continue to diversify away from the dollar

Thus, demand for gold from these institutions is far from over, leaving a sustained long-term upward trend for gold prospects.

Overall, institutions remain generally positive about the prospects for gold prices in 2025, citing central bank purchases as a long-term bullish factorMeanwhile, U.Spolicy uncertainty and continued safe-haven demand persists, though the magnitude of price increases may not match the impressive rise seen in 2024.

On January 7, the National Foreign Exchange Administration announced that China's gold reserves stood at 73.29 million ounces by late December 2024, an increase of 330,000 ounces from the end of November when the total was 72.96 million ouncesPreviously, the People's Bank of China had added to its reserves for 18 consecutive months before pausing from May this year, only to resume its acquisitions in November.

According to Krishan Gopaul, senior analyst at the World Gold Council (WGC), global central banks in November 2024 remained strong proponents of gold demand, with emerging markets once again accounting for the largest share of gold purchases

Gopaul mentioned that “November was another robust month for acquisitions, with a total of 53 tons of gold being net purchased by central banks, primarily from emerging market economies.”

For clients optimistic about future rises in gold prices,

the Huaxia Gold ETF (518850) closely tracks gold price movements, allowing for T+0 transactions, which is suitable for investors requiring asset allocationIt serves as a foundational asset for such allocations through off-market connections (008701/008702).

For those looking at stocks in the gold industry for future profit potential, aiming for higher returns in equity markets with increased elasticity,

industry experts believe that gold stocks tend to mirror gold price movements but offer greater volatility, thus potentially amplifying the value derived from increases in gold prices