Gold prices held steady on Friday as they notched their best year since 2020 at levels comfortably above $2,000 an ounce, buoyed by hopes the U.S. Federal Reserve could cut interest rates as early as March.
Spot gold was at $2,062.59 per ounce, unchanged from the previous session. U.S. gold futures settled 0.6% lower at $2,071.80, closing the year 13.45% higher to cinch its first positive year in three.
"The ship is moving towards calmer waters, so to speak — a lower rate environment, which means a lower dollar, and so gold should do better," Marex analyst Edward Meir said.
Gold investors anticipate record-high prices next year, when the fundamentals of a dovish pivot in U.S. interest rates, continued geopolitical risk, and central bank buying are expected to support the market.
"To see higher levels, we need to see stronger demand from investors, such as a pickup in ETF inflows. For that weaker U.S. economic data and lower inflation is needed, so that the Fed sounds more dovish," UBS analyst Giovanni Staunovo said.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar.