Spot Gold closed down 0.48% last Friday (December 30), closing at $2,620.96 per ounce, barely holding above the 100-day moving average of 2,616.01, as rising U.S. Treasury yields diminished the appeal of non-yielding gold in the thin trading during the holiday season. The market is focused on the return of elected President Trump and the potential impact of his inflationary stimulus policies on the Fed's outlook before 2025.

Bob Haberkorn, senior market strategist at RJO Futures, stated, "Treasury yields are slightly higher now, and gold will remain under pressure in the short term... The holiday market is experiencing thin trading."

The U.S. 10-Year Treasury Notes Yield surged last Friday, leading to a sell-off in the stock market. The trading volume was light last week, with shortened hours due to the holiday, as investors awaited this week's unemployment claims data for clues on the economic outlook for the New Year.

Data released by the U.S. Census Bureau last Friday showed that retail inventories in November rose from $825.4 billion the previous month to $827.5 billion, an increase of 0.3%. Wholesale inventories decreased from $903.8 billion in October to $901.6 billion, a decline of 0.2%. Treasury yields did not change much after the corporate inventory data was released.

Jack McIntyre, global fixed income portfolio manager at Brandywine Global Investment Management, stated that another factor in Treasury trading on Friday was the sell-off in the U.S. stock market.

The Dow Jones Industrial Index closed down 0.74% last Friday, while the S&P 500 Index fell 1.08%.

"This represents a potential wealth transfer effect," McIntyre said. "A more pessimistic economic outlook could, in turn, affect people's appetite for Treasuries."

The U.S. 10-Year Treasury Notes Yield rose by 1.2 basis points last Friday compared to the end of Thursday, reaching 4.596%. The yield touched a high of 4.641% last Thursday, the highest level since May 2, but pulled back after a strong seven-year Treasury auction that afternoon.

(U.S. 10-Year Treasury Notes Yield daily chart, source: Easy Forex)

According to the term structure of federal funds rate futures, traders believe the likelihood of the Federal Reserve relaxing its policy at the January meeting is extremely low, especially after the Fed cut rates for the third time this month, marking a shift towards an easing stance since September.

According to data from the London Stock Exchange Group (LSEG), traders do not expect a rate cut before May and believe the probability of a second 25 basis point cut before the end of next year is less than 50%.

This week will see the New Year's holiday, and market trading may be relatively light. Data to be released includes the November pending home sales data on December 30 and the S&P Case-Shiller Home Price Index on December 31. The latest initial unemployment claims data will be published on January 2 after the New Year's holiday. Additionally, the final SPGI Manufacturing PMI will be released for European and American countries, and China's official Manufacturing PMI data for December will be released on Tuesday, which investors need to pay attention to.

Despite a slight decline of 0.06% in the USD last Friday, closing at 108.02, it still rose for the fourth consecutive week, reducing the attractiveness of Gold for holders of other currencies. On December 20, the USD Index reached its highest point in two years at 108.54, with an annual increase expected at 6.6%.

So far this year, Gold has skyrocketed by 28%, reaching a record high of $2790.15 on October 31. The Fed's rate-cutting cycle and escalating global tensions have driven this surge.

Despite the Federal Reserve currently expecting a reduction in the number of rate cuts, most Analysts remain Bullish on the Gold market's trend in 2025.

They believe that geopolitical tensions around the Global will continue to escalate, and central banks will keep buying Gold in large quantities. Political uncertainty will linger with Trump's return to the White House in January.

His proposed tariffs and trade protectionist policies are expected to trigger potential trade wars, thus enhancing Gold's appeal as a safe-haven asset.

This week, Gold prices will focus on the 2600-2641.45 range, with the latter being the 21-day moving average; a breakout in this range is expected to provide guidance for further trends in the market.

(Spot gold daily chart, source: E-Huitong)