BY COMFORT OGBONNA
Gold climbed on Tuesday as investors positioned themselves for a widely expected December interest rate cut from the Federal Reserve. With the central bank beginning its two-day policy meeting later in the day, market attention is increasingly shifting to whether officials will hint at a slower pace of easing in the months ahead.
Spot gold rose 0.47% to $4,208.39 per ounce by 0920 GMT, while U.S. gold futures for February delivery gained 0.48% to $4,237.80 per ounce. The move reflects growing confidence that the Fed will lower borrowing costs, though analysts say policymakers have signaled a more measured and cautious approach to further cuts.
Linh Tran, market analyst at XS.com, noted that although expectations for additional rate reductions remain intact, the Fed’s recent communication points to a gradual strategy rather than an aggressive easing cycle. Markets currently price in an 89% chance of a 25-basis-point rate cut when the meeting concludes on Wednesday, according to the CME’s FedWatch Tool. Still, investors are more focused on any clues that may reveal the direction of monetary policy in early 2026.
Lower interest rates typically benefit gold by reducing the opportunity cost of holding non-yielding assets. However, some analysts believe the market may see brief periods of profit-taking or repositioning ahead of the Fed announcement. Zain Vawda, analyst at MarketPulse by OANDA, said the broader bullish outlook for gold remains intact despite these short-term adjustments.
Many forecasters expect the Fed to deliver what is being described as a “hawkish cut”—a rate reduction paired with guidance that highlights the central bank’s caution and the high bar for additional easing next year.
Recent U.S. data supports this stance: the Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation measure, aligned with expectations, while consumer sentiment improved in December. At the same time, private payrolls for November posted their sharpest decline in more than two and a half years, though jobless claims recently fell to their lowest level in three years.
In the broader precious metals market, silver rose 1.17% to $58.80 per ounce. The metal hit a record high of $59.32 on Friday, driven by concerns over tight physical supply, shrinking inventories and expectations of supportive macroeconomic conditions, including future rate cuts. Dat Tong, senior strategist at Exness, said silver could trade between $55 and $60 through year-end depending on how monetary policy expectations develop.
Platinum gained 0.68% to $1,653.40 per ounce, while palladium advanced 0.6% to $1,474.00 per ounce, extending the steady upward trend seen across the precious metals sector as investors await the Fed’s next move.
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