Gold Still Hot, Fed Getting More Dovish?
Gold prices rose for the third consecutive day after the Federal Reserve cut interest rates again and signaled a dovish stance. The precious metal briefly strengthened by about 0.5% to approach $4,248 per troy ounce, supported by falling US bond yields and a weakening dollar index following the final FOMC meeting of the year. At the same time, silver prices surged to a new record around $62 per ounce, confirming strong investor interest in the precious metal.
The Fed cut its benchmark interest rate by 25 basis points to 3.5%–3.75% for the third consecutive time, but maintained its projection of only one more cut in 2026. The subtle shift in the policy statement, which emphasized the uncertainty of the future path of cuts, was interpreted by the market as a softer tone than expected. The FOMC committee itself was split, with a 9–3 vote and dissenters on both sides of the spectrum—this was the first time since 2019 that three different officials had publicly disagreed. As Charu Chanana of Saxo Markets put it, this decision feels more like "relief, not euphoria," as the 25 bps cut and the resulting yield drop had already been widely priced in.
Trendwise, the performance of gold and silver this year has been nearly "historic." Gold has surged more than 60% year-to-date, while silver has more than doubled, putting both on track for their best annual performance since 1979. This sharp rally has been fueled by aggressive central bank buying, as well as investors shifting from bonds and currencies to hard assets. World Gold Council data shows that gold-backed ETF holdings have increased every month this year except May, indicating that institutional demand remains solid.
Looking ahead, a combination of macroeconomic factors appears to still favor gold. Chanana highlights the widening US fiscal deficit, persistently high geopolitical risks, the de-dollarization trend, and continued central bank purchases as fueling the gold bull market. Additionally, the Fed will begin purchasing $40 billion in Treasury bills per month to increase liquidity in the financial system, a move that is typically positive for assets like gold. On the political front, President Donald Trump renewed his push for "much lower" interest rates, reinforcing expectations that the next Fed chairman could be more dovish. At 9:50 a.m. in Singapore, gold was still up about 0.2% at $4,238.23, silver held near a record, while platinum and palladium also strengthened, amid a slightly weaker dollar. (asd)
Source: Newsmaker.id
