Gold (XAU/USD) traded under pressure on Wednesday (December 24th) after surging to a new all-time high near $4,526 earlier. Volatility increased amid thin holiday liquidity ahead of Christmas, prompting mild profit-taking at elevated levels. At the time of writing, XAU/USD was trading around $4,470, up nearly 3% this week.

Gold bullion's historic rally this year has been remarkable, with prices rising more than 70% since the start of the year, putting gold on track for its strongest annual performance since 1979. This rally has been driven by strong safe-haven demand amid persistent geopolitical risks and economic uncertainty, as well as strong institutional and investment flows.

Another key driver behind gold's historic rally has been the broad-based weakness of the US dollar (USD), fueled by US President Donald Trump's protectionist trade rhetoric and the Federal Reserve's (Fed) monetary policy easing.

The Fed has cut interest rates by a cumulative 75 basis points (bps) through 2025. The market also expects two additional rate cuts next year. This environment continues to support demand for precious metals, as lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.

Looking ahead, gold is likely to experience consolidation in the near term, as the lack of new market catalysts and further profit-taking towards year-end could exert downward pressure on prices. Nonetheless, the overall uptrend remains intact, suggesting that the rally is likely to continue into 2026. (alg)

Source: FXstreet