Investors continue to believe that the Federal Reserve (Fed) may adopt a more cautious monetary policy approach next year, leading to a rapid strengthening of the US dollar and directly affecting gold prices.

The Fed has lowered its forecast for interest rate cuts next year, citing slower-than-expected declines in inflation and uncertainties surrounding Donald Trump’s economic policies on immigration, trade, and taxes. It is projected that the interest rate will stand at 3.9% by the end of 2025.

Investors are also keeping a close eye on additional US economic data, particularly the initial jobless claims report, which will be released this Thursday and could lead to volatility in the US dollar. Additionally, the December non-farm payrolls report, expected in the first week of January, is another key point of focus.

Source: Fxstreet