With the US Fed FOMC meeting out of the way, gold prices stayed flat and waited for fresh triggers. Gold continued to trade around $4,200, before and after the December FOMC meeting.
On Friday, gold managed to cross $4,300 in the international markets. Gold is testing the record highs reached in October, and is on track for a weekly gain, supported by expectations of further US monetary easing.
What changed? The jobless claims data that arrived on Thursday signalled further weakness in the job market.
Fresh signs of cooling in the labor market suggest that the Federal Reserve might implement two rate cuts in 2026, as jobless claims for the week of December 6 exceeded expectations, hitting their highest level in over two months.
FOMC Meeting
US Fed FOMC decided to cut interest rates by 25 bps on December 10. But, that was on expected lines as weakness in the job market was indicating a rate cut by team Powell.
However, what came as a surprise to the markets were the revelations of the Fed dot plot and Powell’s thoughts in the press conference.
Fed dot plot revealed that there’s going to be one rate cut in 2026, as was in the September dot plot, and another in 2027. A higher for longer rate scenario is bearish for gold.
However, some analysts believe there could be a 75bps rate cut in 2026. Fed rate cuts are bullish for gold as the attractiveness of a non-yielding asset grows in a falling rate environment.
Gold Prices
Gold prices have historically increased during times of high uncertainty, reflecting the strain on the world economy and politics.
Central banks continue to hoard gold. According to figures from the World Gold Council, the demand for the yellow metal reached an all-time high of 1,313 tonnes in the third quarter of this year.
In 2024, central banks bought a combined 1,045 tonnes, accounting for about a fifth of overall demand, with Poland, India and Turkey being the largest buyers.
ING 2026 Gold Price Outlook reports that macro tailwinds and strong fundamentals point to further upside in 2026. Goldman Sachs is also bullish and, in a recent report, says that it sees significant upside to its year-end gold price for 2026. Goldman Sachs forecasts nearly 20% price upside by the end of 2026, forecasting a price of $4,900 per troy ounce by the end of 2026.
Trump’s trade war continues alongside heightened geopolitical risks and even the ETF holdings are growing, all supporting higher gold prices. The downside to gold prices emerges from the situation where a central bank decides to dump gold, driving prices lower.