Investing.com– Gold prices rose slightly in Asian trade on Thursday, extending their strong performance from 2024 as a weaker U.S. dollar provided support, while traders remained cautious given the U.S. Federal Reserve’s projection of fewer interest rate cuts this year.

rose 0.3% to $2,632.82 per ounce, while expiring in February edged 0.1% higher to $2,644.47 an ounce by 23:06 ET (04:06 GMT).

Gold ends 2024 with hefty gains, 2025 outlook dim on Fed rate outlook

The yellow metal jumped 27% in 2024, marking its best year since 2010, helped by the Fed’s outsized rate cuts in the previous year and geopolitical tensions around the globe.

When interest rates are low, the opportunity cost of holding gold decreases compared to interest-bearing assets like bonds or savings accounts. As a result, investors typically allocate more capital to gold as a store of value and a hedge against uncertainty.

While gold prices rose for most of the year, the Fed’s December meeting acted as a bump as it signaled only two more rate cuts in 2025

Gold prices had fallen sharply after the Fed meeting and have seen subdued movements since then, reflecting a cautious outlook for next year.

Dollar weakens but remains near 2-yr high, other precious metals rise

The fell 0.2% in Asia hours on Thursday but remained near a two-year high it reached last month. The were also higher.

With expectations of fewer rate cuts in 2025, the dollar has strengthened further, creating pressure on gold.

A stronger dollar weighs on gold prices as it makes the yellow metal more expensive for buyers using other currencies.

Other precious metals were higher on Tuesday. rose 0.7% to $916.65 an ounce, while gained 1.6% to $29.715 an ounce.

Copper rises on weaker dollar, Chinese PMI data

Among industrial metals, copper prices were higher on Thursday due to a weaker dollar, while a rise in monthly Chinese factory activity provided support.

 grew in December but at a slower-than-anticipated pace, Caixin PMI data showed on Thursday.

The data suggests that the impact of recent stimulus measures is waning. Markets are holding out for more clarity on Beijing’s plans for stimulus measures in the coming year, where the government has signaled looser monetary policy in 2025.

Benchmark  on the London Metal Exchange rose 0.9% to $8,863.50 a ton, while February  gained 0.7% to $4.0492 a pound.

By Anna Hirtenstein

LONDON (Reuters) -Oil prices rose on Thursday as investors returned for the first trading day of the new year with an optimistic eye on China’s economy and fuel demand after a pledge by President Xi Jinping to promote growth.

futures rose $1.04, or 1.39%, to $75.68 a barrel by 1205 GMT after gaining 65 cents on Tuesday, the last trading day of 2024. U.S. West Texas Intermediate crude was up $1.02, or 1.42%, at $72.74.

Xi’s New Year address on Tuesday said that China would implement more proactive policies to promote growth in 2025.

China’s factory activity grew in December, a Caixin/S&P Global survey showed on Thursday, but at a slower pace than expected in the face of concerns over how tariffs proposed by U.S. President-elect Donald Trump will affect the trade outlook.

The data echoed an official survey released on Tuesday, which showed that China’s manufacturing activity barely grew in December. However, services and construction fared better, with the data suggesting that policy stimulus is trickling into some sectors.

Weaker Chinese data is seen by some analysts as positive for oil prices because it could prompt Beijing to accelerate its stimulus programme. 

Traders are returning to their desks and probably weighing higher geopolitical risks and Trump running the U.S. economy red hot against the expected impact of tariffs, said IG market analyst Tony Sycamore.

“Tomorrow’s US ISM manufacturing release will be key to crude oil’s next move,” Sycamore said.

Sycamore said WTI’s weekly chart is winding itself into a tighter range, suggesting that a big move is coming.

“Rather than trying to predict in which way the break will occur, we would be inclined to wait for the break and then go with it,” he added.

Investors are also awaiting weekly U.S. oil stocks data from the Energy Information Administration, which was postponed to Thursday because of the New Year holiday.

oil and distillate stockpiles are expected to have fallen last week while gasoline inventories are expected to have risen, an extended Reuters poll showed on Tuesday. [EIA/S]

October’s oil demand reached the highest level since the COVID-19 pandemic at 21.01 million barrels per day (bpd), up about 700,000 bpd from September, EIA data showed on Tuesday.

Crude output from the world’s top producer rose to a record 13.46 million bpd in October, up 260,000 bpd from September, the report showed.

Oil prices are likely to be constrained near $70 a barrel in 2025, down for a third year after a 3% decline in 2024, with weak Chinese demand and rising global supplies offsetting OPEC+ efforts to shore up the market, a Reuters poll showed.

In Europe, Russia halted gas pipeline exports through Ukraine on New Year’s Day after the transit agreement expired on Dec. 31. The European Union has arranged alternative supply ahead of the widely expected stoppage while Hungary will keep receiving Russian gas via the TurkStream pipeline under the Black Sea.

By Georgina McCartney

HOUSTON (Reuters) -Oil prices fell around 3% in 2024, slipping for a second straight year, as the post-pandemic demand recovery stalled, China’s economy struggled, and the U.S. and other non-OPEC producers pumped more crude into a well-supplied global market.

futures on Tuesday, the last trading day of the year, settled up 65 cents, or 0.88%, to $74.64 a barrel. U.S. West Texas Intermediate (WTI) crude settled up 73 cents, or 1.03%, to $71.72 a barrel.

The Brent benchmark settled down around 3% from its final 2023 closing price of $77.04, while WTI was roughly flat with last year’s final settlement.

In September, Brent futures closed below $70 a barrel for the first time since December 2021, and this year Brent broadly traded under highs seen in the past few years as the post-pandemic demand rebound and price shocks of Russia’s 2022 invasion of Ukraine began to fade.

Oil will likely trade around $70 a barrel in 2025 on weak Chinese demand and rising global supplies, offsetting OPEC+-led efforts to shore up the market, a Reuters monthly poll showed on Tuesday.

A weaker demand outlook in China in particular forced both the Organisation of the Petroleum Exporting Countries and the International Energy Agency (IEA) to cut their oil demand growth expectations for 2024 and 2025.

The IEA sees the oil market entering 2025 in surplus, even after OPEC and its allies delayed their plan to start raising output until April 2025 against a backdrop of falling prices.

U.S. oil production rose 259,000 barrels per day to a record high of 13.46 million bpd in October, as demand surged to the strongest levels since the pandemic, data from the U.S. Energy Information Administration (EIA) showed on Tuesday.

Output is set to rise to a new record of 13.52 million bpd next year, the EIA said.

ECONOMIC, REGULATORY OUTLOOK

Investors will be watching the Federal Reserve’s interest rate-cut outlook for 2025 after Fed bank policymakers this month projected a slower path due to stubbornly high inflation.

Lower interest rates generally spur economic growth, which feeds energy demand.

Some analysts still believe supply could tighten next year depending on President-elect Donald Trump’s policies, including those on sanctions. He has called for an immediate ceasefire in the Russia-Ukraine war, and he could re-impose a so-called maximum pressure policy toward Iran, which could have major implications for oil markets.

“With the possibility of tighter sanctions on Iranian oil with Trump coming in next month, we are looking at a much tighter oil market going into the new year,” said Phil Flynn, a senior analyst for Price Futures Group, also citing firming Indian demand and recent stronger Chinese manufacturing data.

China’s manufacturing activity expanded for a third-straight month in December, though at a slower pace, suggesting a blitz of fresh stimulus is helping to support the world’s second-largest economy.

Buoying prices on Tuesday, the U.S. military said it carried out strikes against Houthi targets in Sanaa and coastal locations in Yemen on Monday and Tuesday.

The Iran-backed militant group has been attacking commercial shipping in the Red Sea for more than a year in solidarity with Palestinians amid Israel’s year-long war in Gaza, threatening global oil flows.

Meanwhile, oil stocks fell last week while fuel inventories rose, market sources said, citing American Petroleum Institute figures on Tuesday.

Crude stocks fell by 1.4 million barrels in the week ended Dec. 27, the sources said on condition of anonymity. Gasoline inventories rose by 2.2 million barrels, and distillate stocks climbed by 5.7 million barrels, they said.