Gold Prices Gain Momentum on Anticipated Fed Rate Cut

Gold XC0009655157

Market consensus has solidified around an imminent interest rate reduction by the Federal Reserve. Investors are pricing in an 88% probability that the US central bank will lower its key rate by another 25 basis points this week. This expectation is providing a tailwind for gold, which is trading firmly above the $4,210 per troy ounce level, marking a 0.27% gain from the previous session.

The precious metal's technical picture strengthened significantly after it successfully cleared the psychologically important $4,200 barrier. This move is widely interpreted as a bullish signal. The next key resistance level is seen at $4,250. With the current price just 0.58% below the record peak of $4,265 reached in early December, the all-time high from October 2025 at $4,381 is coming back into view.

Current Market Snapshot:
* Spot Price: $4,240, reflecting a 0.10% daily increase.
* Monthly Performance: A substantial gain of 5.80% over the past 30 days.
* Record High: $4,265 (early December).

Dollar Weakness Fuels the Rally

The primary driver behind gold's strength is a softening US dollar. The prospect of lower benchmark interest rates diminishes the dollar's yield appeal. Consequently, dollar-denominated gold becomes less expensive for international buyers holding other currencies. Recent US employment data, which presented a mixed picture, alongside core inflation figures meeting forecasts, have given the Fed the perceived flexibility to initiate this expected policy easing.

A further decline from the current federal funds rate corridor of 3.75% to 4.00% is now anticipated. For gold, a non-yielding asset, this environment reduces its opportunity cost compared to interest-bearing securities like bonds.

The Focus Shifts to the 2026 Outlook

While the immediate rate decision is considered almost fully priced in by markets, traders' attention is turning toward the Federal Reserve's updated economic projections for 2026. Should the central bank's "dot plot" signal a steeper path of rate reductions for the coming year, the existing upward trend in gold could find additional acceleration. This momentum is further supported by continued inflows into gold-backed exchange-traded funds (ETFs), particularly from Asian markets.