Precious metals are trading near record levels as market participants brace for a pivotal policy decision from the U.S. Federal Reserve. Gold is consolidating just below the $4,200 per ounce mark, with significant volatility expected following the central bank’s announcement on December 9.
Economic Data Fuels Rate Cut Expectations
Recent economic indicators from the United States have solidified market expectations for monetary easing. Key data points supporting a dovish shift include a private sector employment decline of 32,000 jobs in November and over 71,000 announced layoffs reported by Challenger. Furthermore, the Core PCE Index—the Fed’s preferred inflation gauge—has cooled to 2.8%.
This economic backdrop has led markets to price in an 87.2% probability of a 25-basis-point interest rate reduction at the upcoming meeting. Several Federal Reserve officials have recently voiced support for continuing the cycle of rate cuts, setting the stage for the December decision.
Diverging Demand and a Weaker Dollar
A softening U.S. dollar is enhancing gold’s appeal for international buyers. However, physical market activity presents a mixed picture. Major consumers in India and China are exhibiting restraint, with buyers waiting for lower spot prices before entering the market.
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In contrast, central banks in emerging markets remain active purchasers. The World Gold Council reported increased official sector buying during October. The Central Bank of Russia has explicitly linked this sustained demand to ongoing geopolitical tensions and the need to diversify away from U.S. dollar-denominated assets following the freezing of foreign reserves.
Silver Outshines Gold with Record Rally
While gold has posted a strong performance, gaining 59% this year and reaching an all-time high of $4,381 in October, it is being significantly outpaced by its sister metal. Silver has surged an impressive 98% in 2025, driven by structural supply deficits and robust industrial demand from the electrification and solar energy sectors. The white metal recently set a new record price of $59.32 per ounce.
Outlook Hinges on Fed Guidance
Market analysts see further upside potential for gold in 2026, with price forecasts ranging from $4,500 to $5,000 per ounce. The immediate direction, however, will be dictated by the Federal Reserve’s policy statement and the subsequent press conference chaired by Jerome Powell. The coming week is poised to provide critical clarity for the precious metals complex.
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