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After losing more than 4% in the last week of the year, gold (XAU/USD) has gained momentum as trading conditions return to normal.
Although XAU/USD entered a consolidation phase after the rally seen earlier in the week, it still managed to post weekly gains. December inflation data from the United States and geopolitical developments are likely to drive gold’s movement in the short term.
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The price of gold rebounds after a low end to 2025
Gold posted heavy losses between the Christmas and New Year holidays. In the absence of fundamental catalysts, profit-taking appeared to be behind the move, which was bolstered by lower trading volumes.
When market conditions begin to return to normal, XAU/USD gained momentum It rose more than 2.5% on Monday.
In addition, escalating geopolitical tensions have resulted in news of… The US military enters Venezuela and arrests its president, Nicolas Maduro And his wife on the weekend, for the gold, taking advantage of the safe haven flows.
After gold continued its rally and posted an additional 1% gain on Tuesday, the strength… US dollar (USD) renewable The CME Group’s decision to raise margins on gold and silver futures contracts caused the XAU/USD to lose momentum.
Data published by the Automated Data Processing Foundation (ADP) on Wednesday showed that US private sector wages rose From 41,000 in December after a decrease of 29,000 recorded in November.
In other positive news, the Institute for Supply Management (ISM) reported that its Index of Companies Purchasing Services (PMI) improved to 54.4 in December from 52.6 in November.
In addition, the employment index in the PMI survey rose in expansion territory above the 50 level for the first time since June.
With these data confirming the possibility of the Federal Reserve (Fed) consolidating its policy in January, gold fell in the middle of the week before entering a consolidation phase.
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At this time, China announced restrictions on the export of silver (XAG/USD), and with this development, silver prices rose sharply at the beginning of the week, gaining more than 10% in two days.
“China is second in the production of silver mining in the world, but the Chinese dominate the silver market thanks to their massive refining capabilities. The country controls 60 to 70% of the global supply of refined silver,” said Mike Mahary, FXStreet contributor and analyst at Money Metals Exchange, when talking about this topic.
The increase in margin by CME caused a strong correction in the XAG/USD price, but the gold/silver ratio, which represents the number of ounces of silver needed to buy an ounce of gold, fell by about 4% during the week.
The gold/silver ratio is around 57, and is currently at its lowest levels since August 2013.
The US Department of Labor Statistics (BLS) announced on Friday that non-farm payrolls rose by 50,000 in December, compared to market expectations of 60,000.
The unemployment rate registered a positive drop to 4.4% from 4.6% in November. Market reaction to the jobs data was muted, with gold settling in the upper half of its weekly range over the weekend.
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Gold traders focus on geopolitics and US inflation data
Evening Economic agenda Relatively light in terms of version data. The BLS will publish Tuesday Consumer Price Index data for December.
November retail sales and the producer price index will also be on the US economic docket, and market participants will likely largely ignore these data.
The December inflation date is unlikely to significantly influence the Fed’s decision in January, but any major surprise, especially in the monthly core CPI data, could trigger a market reaction.
A record 0.3% or more could ease concerns about inflation that remains high and support the US dollar in the immediate future.
However, if the reading is less than 0.2%, it may have an adverse effect on the performance of the currency and support an increase in XAU/USD.
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Investors should closely monitor geopolitical headlines during the week. US Secretary of State Marco Rubio plans to hold meetings with officials from Denmark and Greenland.
US President Donald Trump confirmed in an interview with the New York Times his intention to capture Greenland. “Property is very important,” Trump told the newspaper.
Trump said it’s because he feels it’s psychologically necessary to succeed. He stated that ownership gives you something that you cannot get through a lease or deal. He added that ownership gives you elements and advantages that you don’t get just by signing a document.
It is difficult to determine what will be the next step in this matter, but the growing tension between the European Union and the United States could prompt investors to seek a safe haven.
In this scenario, gold can strengthen.
Reports have shown that the unrest in Iran, led by anti-government demonstrations across the country, including the capital Tehran, may also impact the investment mood in the near future.
US President Trump has said the US may resort to military action against Iran if authorities use lethal force against protesters.
The escalation of the conflict in Iran and the active intervention of the United States may allow gold to continue to benefit from safe haven flows.
