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Gold headed for best year since 2010

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Base case projects gold prices around $2800/oz in 2025 -

analyst

(Updates with action in U.S. morning hours)

By Sherin Elizabeth Varghese

Dec 24 (Reuters) - Gold prices steadied in

holiday-thinned trade on Tuesday as investors looked ahead to

the U.S. Federal Reserve's interest rate strategy and

President-elect Donald Trump's tariff policies that could shape

the metal's trajectory next year.

Spot gold was little changed at $2,616.31 per ounce,

as of 9:27 a.m. ET (1426 GMT). U.S. gold futures were

steady at $2,631.60.

"The current sideways trend appears to be primarily driven

by the low liquidity environment," said Zain Vawda, market

analyst at MarketPulse by OANDA.

Gold had a stellar year in 2024, poised for its best

performance since 2010 with a 27% gain.

"A similar rally could occur in 2025, but this will largely

hinge on geopolitical developments," Vawda added. "Without

unexpected geopolitical disruptions, the base case projects gold

prices around $2,800/oz, driven by persistent risks and trade

war concerns."

Bullion is considered a safe investment during economic and

geopolitical turmoil.

Analysts had predicted that successive record highs in 2024

would set the stage for a similar rally in 2025, fueled by

sustained central bank buying, rising geopolitical tensions, and

Fed rate cuts.

However, the momentum began to wane in early November as the

dollar strengthened amid "Trump euphoria", denting gold's rally.

With Trump set to return to the White House in January, U.S.

investors are bracing for significant policy shifts in 2025,

including higher trade tariffs, deregulation, and tax changes,

all of which could have inflationary implications.

"If (tariffs are) borne out, this would give less room for

the U.S. Fed to continue cutting interest rates, and we've seen

the market already scaling back expectations on that front for

2025," said Frank Watson, precious metals analyst at Kinesis

Money.

While the Fed aggressively cut rates in September, November,

and December, it has signaled fewer cuts in 2025 due to

stubbornly high inflation.

Higher rates increase the opportunity cost of holding the

non-yielding bullion.

Spot silver was unchanged at $29.66 per ounce,

platinum rose 0.2% to $941.25, while palladium

gained 0.9% to $938.20.