Gold Holds Its Ground as Fed Rate Cut Bets Surge
Gold is poised to close the week with a modest gain, rising less than 1% but remaining more than $100 below its October record high. The move reflects a surge in investor conviction that the Federal Reserve will cut rates by 25 basis points next week — a shift that has pressured the US dollar and boosted demand for commodities priced in USD.
Lower rates historically strengthen gold by weakening bond yields and increasing appetite for non-interest-bearing assets. That dynamic has powered one of the most dramatic gold rallies in modern history:
- 60% YTD surge
- 50+ all-time highs in 2025
- Best trajectory since 1979
For perspective, gold has dramatically outperformed major asset classes this year:
- Silver: +100% YTD
- Gold: +60% YTD
- S&P 500: +17% YTD
- Bitcoin: –2% YTD
Momentum and Central Banks Are Doing the Heavy Lifting
A new World Gold Council report highlights that momentum trading has been a larger driver than in previous years — a natural outcome after months of record-breaking price action that has drawn in both retail and institutional flows.
At the same time, central-bank demand remains structurally strong. While 2025 may not match the record-setting buying of recent years, global central banks continue to accumulate above historical averages, reinforcing gold’s role as a long-term reserve asset.
The Council expects the macro setup — continued fiscal spending, lower rates, and a softer dollar — to support prices into 2026. Their base case:
- Gold could rise another 5%–15% next year, implying a range that reaches $4,900/oz.
- Additional upside could come from new institutional buyers, such as insurers in China and pension funds in India.
Goldman Sachs echoed the view on Thursday, reiterating a bullish outlook and targeting $4,900 by end-2026.
WSA Take
Gold’s 2025 rally hasn’t been a speculative fever — it’s been a structural reset. Rate cuts, global currency hedging, and sustained central-bank accumulation continue to anchor demand, while fiscal expansion and geopolitical risk add fuel. Momentum remains strong, and the path into 2026 still leans upward.
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