New Delhi, November 25:Gold prices continued their remarkable upward trajectory on Tuesday (November 25), extending their historic rally as market expectations for a US Federal Reserve rate cut in December gained momentum. The precious metal surged to around $4,175 per ounce, continuing a multi-month rally that analysts predict may extend into the next year.
Bank of America (BofA) now forecasts that gold could average $4,538 per ounce in 2026, with the potential to climb as high as $5,000. This bullish outlook is supported by favorable macroeconomic factors and sustained demand for gold as a safe-haven asset.
Internationally, gold extended Monday’s strong performance, following a near 2% rise in the previous session. Spot prices remained close to $4,175 per ounce, continuing their rise to record highs fueled by weaker yields, macroeconomic uncertainties, and safe-haven demand.
In India, early trading on the Multi-Commodity Exchange (MCX) saw gold rise by more than 1%, mirroring global trends as investors adjusted their positions ahead of a possible shift in US monetary policy.
Market expectations of a December rate cut surged after comments from New York Fed President John Williams. Reuters reported that Williams suggested easing policy soon, stating that cutting interest rates "won’t hurt the Fed’s fight against inflation" and would promote broader economic stability. His remarks fueled market optimism that the Fed’s rate-hike cycle may be nearing its end.
According to the CME FedWatch Tool, traders now assign an 81% probability to a Fed rate cut in December, a sharp increase from just 40% last week. Lower interest rates are typically seen as positive for gold, as the metal carries no yield, making it more attractive when the opportunity cost of holding it decreases.
Gold has been on an extraordinary rise this year, surpassing $4,000 per ounce for the first time in history. This rally has been driven by global economic uncertainty, geopolitical tensions, ongoing inflationary pressures, and a weakening US dollar.
