The latest interest rate cut from the U.S. Federal Reserve has introduced a note of uncertainty into the gold market, tempering the precious metal’s recent momentum. While the Fed delivered a widely anticipated reduction, its hesitant forward guidance and internal dissent have capped short-term gains. Despite this consolidation, gold’s year-to-date performance remains exceptionally strong.

A Divided Committee and Measured Guidance

In a move forecast by markets, the Federal Reserve lowered its benchmark interest rate by 25 basis points to a target range of 3.50% to 3.75%. This marks the third consecutive meeting with a cut. However, the decision revealed notable friction within the Federal Open Market Committee (FOMC), with three members voting against the reduction—a sign of growing policy disagreement.

Chair Jerome Powell offered little clear direction for the coming quarters. The central bank’s projections now signal just one additional rate cut for 2026, a pace that falls short of the faster easing cycle many investors had anticipated. This cautious outlook forms a key headwind for non-yielding assets like gold.

Simultaneously, the Fed introduced a supportive measure: a plan to purchase $40 billion in Treasury bills each month. Coupled with its assessment that inflation remains “somewhat elevated,” the overall message is one of gradual, rather than aggressive, monetary loosening.

Key Takeaways from the Fed Meeting:
* Third straight 25-basis-point cut, bringing the target range to 3.50–3.75%.
* Three dissenting votes against the cut, indicating unusual internal division.
* Forward guidance points to only one more rate reduction in 2026.
* New monthly Treasury bill purchases of $40 billion announced.

Silver Steals the Spotlight as Gold Consolidates

Market reaction to the Fed’s announcement was mixed. Spot gold prices edged lower, while near-term futures contracts posted modest gains. The metal briefly touched a one-week high before profit-taking emerged.

“The Fed’s message is that future rate cuts may be ‘few and far between,’ which limits additional near-term upside for gold,” explained Tim Waterer, Chief Market Analyst at KCM Trade.

The session’s standout performer was silver. The white metal surged to a fresh all-time high of $62.88 per ounce, more than doubling in value since the start of the year. Analysts attribute silver’s powerful rally to three primary factors:
* Robust industrial demand.
* Declining global stockpiles.
* Its recent inclusion on the U.S. list of critical minerals.

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

Ilya Spivak, Head of Global Macro at Tastylive, notes that silver has decoupled from the broader commodity complex and shows no immediate signs of a trend reversal.

Structural Support from Central Bank Buying

Beneath short-term price fluctuations, a pillar of demand for gold remains firm: central bank purchases. China continues to lead this trend. The People’s Bank of China has expanded its gold reserves for a 13th consecutive month, bringing its total holdings to over 2,300 tonnes. This represents approximately 8% of the nation’s total foreign exchange reserves.

The sustained rally across asset classes has drawn scrutiny from international institutions. The Bank for International Settlements (BIS) recently warned of a potential “double bubble” in gold and equities, noting that such simultaneous strength across both asset classes is unprecedented in the last 50 years and poses a potential risk.

A Powerful Year-to-Date Gain Despite Pause

Even with its current pause, gold’s performance in 2024 remains formidable. The metal is up approximately 57% year-over-year. After reaching a record high above $4,380 per ounce in October, gold currently trades around $4,245—just 0.5% below its 52-week high. This suggests the primary long-term uptrend is still intact.

Technical indicators support this view. With a 14-day Relative Strength Index (RSI) of 57.7, gold sits in a neutral-positive zone, still some distance from overbought territory. Its annualized 30-day volatility of just over 14% indicates a moderate level of price fluctuation, especially considering the significant moves of recent months.

Long-term forecasts remain bullish in some quarters. Analysts at RBC Capital Markets have raised their projections, now forecasting an average price of $4,600 per ounce for 2026 and $5,100 for 2027. They cite persistent geopolitical tensions, an accommodative monetary policy backdrop, and high fiscal deficits as key drivers.

Next Catalysts: Economic Data and the January Meeting

Market attention now turns to upcoming U.S. employment and inflation reports. These data releases will be crucial in determining whether the Fed maintains its cautious approach or pivots toward faster rate cuts.

Consequently, the central bank’s next meeting in January will set the tone for the near-term trajectory. Should the narrative of limited rate reductions hold, gold may extend its consolidation phase. However, any signals pointing to a more rapid easing cycle would provide fresh impetus for the metal to challenge and potentially break through its previous record levels.

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