PRECIOUS-Gold set for weekly gain; focus on incoming Trump administration, Fed's 2025 path

Dec 27 (Reuters) - Gold prices were trading flat on Friday, but were set for a weekly rise, as markets awaited signals on the U.S. economy under the incoming Donald Trump administration and the Federal Reserve's interest rate strategy for 2025.

FUNDAMENTALS

Spot gold XAU= was flat at $2,632.79 per ounce, as of 0024 GMT. Bullion gained 0.45% so far this week.

U.S. gold futures GCv1 were nearly unchanged at $2,653.00.

Trading activity is expected to be subdued as the year-end approaches.

Data on Thursday showed that the number of Americans filing new applications for jobless benefits fell last week to a one-month low, suggesting a resilient labor market and likely maintaining pressure on the Fed to hold interest rates steady.

After aggressively cutting rates in September and November, the Fed persisted with easing in December but hinted at fewer reductions in 2025.

On the geopolitical level, Israel struck multiple targets linked to the Iran-aligned Houthi movement in Yemen on Thursday, including the Sanaa International Airport, and Houthi media said at least six people were killed.

Gold is considered a hedge against geopolitical turmoil and inflation, but higher rates reduce the non-yielding asset's appeal.

The metal has gained 28% so far this year and scaled an all-time peak of $2,790.15 on Oct. 31, fueled by significant Fed reductions, including a jumbo cut in September, and heightened geopolitical uncertainties.

Markets are preparing for major policy shifts, including tariffs, deregulation and tax changes, in 2025 as Trump returns to the White House in January.

SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.13% to 872.80 tonnes on Thursday. GOL/ETF

Spot silver XAG= was steady at $29.80 per ounce, platinum XPT= added 0.4% to $939.69 and palladium XPD= rose 0.19% to $926.64.

(Reporting by Daksh Grover in Bengaluru; Editing by Sumana Nandy)

((Daksh.Grover@thomsonreuters.com;))