The price of gold is approaching its highest levels since late October, propelled by a clear shift in market sentiment. Growing anticipation that the U.S. Federal Reserve will lower interest rates at its December 9-10 policy meeting is providing significant support for the precious metal. Current market pricing indicates an 87% probability of a 25-basis-point cut.

Cooling Labor Market Data Fuels the Rally

Recent economic indicators from the United States are strengthening the case for monetary policy easing. Key labor market reports show a noticeable cooling trend, offering fresh arguments to central bank officials favoring a more accommodative stance.

• Private sector employment, as measured by the ADP report, declined by 32,000 jobs in November.
• The Challenger report documented 71,321 announced job cuts for the month.
• Cumulatively for 2025, nearly 1.17 million layoffs have been announced.

This softening labor landscape coincides with a decline in the Fed’s preferred inflation gauge. The core PCE price index fell to 2.8% year-over-year, while one-year inflation expectations dropped to 4.1%.

A Standout Year for Precious Metals

2025 is shaping up to be one of gold’s strongest performances in decades. The asset has registered more than 50 new all-time highs this year and is up over 60% since January. Its previous record was set in October at over $4,380 per ounce.

Silver is outperforming even gold, with a year-to-date gain of nearly 100%. It reached a fresh record high of $59.32 on Friday.

Should investors sell immediately? Or is it worth buying Gold?

Sustained central bank acquisitions continue to be a major price driver. According to the World Gold Council, official sector purchases in October totaled 53 tonnes. This represents a 36% increase from the previous month and marks the highest monthly demand since the start of the year. China raised its reserves to 2,303.5 tonnes, while India increased its holdings to 880.18 tonnes.

Outlook and Key Price Drivers

Looking ahead, several institutions maintain a constructive view. Goldman Sachs has reaffirmed its bullish outlook, projecting a price target of $4,900 by the end of 2026. The World Gold Council sees potential for further gains of 5% to 15% in the coming year.

The fundamental drivers for gold are seen as remaining intact: lower real interest rates, a weaker U.S. dollar, and persistent geopolitical tensions. However, physical demand from key markets like India and China has recently shown signs of softening, with buyers reportedly waiting for a correction in spot prices.

Currently trading at $4,227.70, gold stands approximately 7% above its 52-week low and remains within striking distance of its recent peak.

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