Gold prices edged slightly lower on Monday as traders took a cautious stance ahead of the Federal Reserve’s last policy meeting of the year. With central bankers gathering to decide on interest rates, sentiment across global markets stayed steady but restrained, as investors waited for clearer guidance.
Spot gold dipped 0.2% to $4,189.49 per ounce in afternoon trade, while February gold futures settled 0.6% lower at $4,217.7 per ounce. The move reflected a market that wasn’t reacting to any major shift in fundamentals, but rather pausing until the Fed delivers its decision.
“All eyes on the Fed this week,” said Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals. He noted that the next direction for prices will largely depend on the Fed statement and comments from Chair Jerome Powell after the meeting.
Gold Prices Under Pressure as Traders Expect Rate Cut
Expectations of a rate cut have grown stronger in recent weeks. Analysts widely anticipate a 25-basis-point reduction, with odds currently sitting at 90%, up sharply from around 66% in November. This outlook has helped keep investor confidence intact, even as gold prices weakened slightly during the latest session.
A rate cut typically weakens the U.S. dollar and reduces the appeal of interest-bearing assets. In that environment, non-yielding gold becomes more attractive. Any shift in policy will likely be reflected quickly in gold prices, especially if the Fed signals a softer stance.
Grant believes the fundamentals for gold remain solid. According to him, central banks around the world continue to accumulate gold as part of their reserve strategy. He also said a move toward $5,000 per ounce in the first quarter of 2026 is still achievable, supported by institutional demand and safe-haven interest.
Gold Prices Supported by Safe-Haven Buying and Geopolitical Risks
Beyond monetary policy, geopolitical tensions are also supporting gold. In London, the leaders of France, Germany, and the United Kingdom reaffirmed their backing for Ukrainian President Volodymyr Zelenskiy at what they described as a critical moment, amid U.S. pressure on Kyiv to consider a peace deal with Russia.
Gold has historically acted as a safe-haven asset during periods of global uncertainty. Economic risks, armed conflict, and unstable supply chains push investors toward more stable stores of value. This backdrop continues to underpin gold prices, even as short-term market moves remain choppy.
Morgan Stanley echoed a bullish outlook, saying further upside is likely. In a recent report, the bank highlighted several drivers, a weaker dollar, strong ETF inflows, steady central bank purchases, and sustained demand for safe-haven assets. Together, these factors form a supportive combination for the precious metals market.
Also read: Gold Prices Gain Momentum Following Analysts’ Target Increase for Gold.com
Silver Market Shows Strength While Tracking Gold
While gold prices dominate attention, silver also saw notable action. Prices fell 0.5% to $57.98 per ounce after hitting a record high of $59.32 on Friday.
Jim Wyckoff, Senior Analyst at Kitco Metals, said silver has actually been leading the gold market in recent weeks. He expects prices to break above $60 per ounce and possibly challenge $70 per ounce before the end of the year.
This momentum adds another layer to the precious metals landscape. Silver traditionally moves in step with gold, but the latest rally shows the market is entering a dynamic phase, especially as expectations around interest rates continue to shift.
Also read: Gold Prices Stay Elevated While Markets Await Powell’s Next Move
Focus Turns to Powell as Markets Seek Signals
Attention now shifts to Jerome Powell’s press conference after the FOMC decision. Markets are looking for clear signals on next year’s policy path. Comments on inflation, economic conditions, and the pace of easing will be closely watched, as they could move prices quickly.
Any adjustment in expectations is likely to be reflected in gold prices almost immediately. If the Fed signals a dovish stance and hints at more easing, investors could increase their exposure to gold. If the Fed sounds cautious, volatility could pick up.
Even so, the longer-term outlook remains positive. As long as safe-haven demand stays strong, central bank buying continues, and the dollar weakens, gold prices are expected to stay well-supported. In a world where uncertainty remains high, precious metals continue to stand out for both individual investors and institutional buyers.
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