The gold market has regained momentum following the Federal Reserve’s latest interest rate cut, even as the central bank offered little indication of aggressive easing through 2026, putting traders and investors on alert for what lies ahead.

On Wednesday, the Federal Reserve lowered its key policy rate by 25 basis points, bringing the federal funds rate to 3.50%–3.75%, the lowest level in three years, in its final monetary policy meeting of 2025. This marked the third straight rate cut this year, though the Fed’s forward guidance remained muted and largely unchanged from its October stance.

Gold—a non-yielding asset that often benefits from lower interest rates—initially saw choppy trading after the rate decision, with spot prices hovering near $4,200 an ounce as markets absorbed the Fed’s cautious outlook.

However, prices recovered in subsequent trade, with spot gold rising above $4,235 in Asian markets as investors digested the implications of the rate cut and limited future guidance.

Global precious metals have shown volatility in the wake of the Fed’s decision. While some trading sessions saw gold slip slightly on uncertainty over future monetary policy, other markets reported gains driven by broader macroeconomic factors, including heightened geopolitical risk and continued demand for safe haven assets.

Silver, in particular, surged to record levels in some markets, reflecting strong industrial demand and supply constraints even as gold held steady.

Despite cutting rates, the Federal Reserve’s updated economic projections—often referred to as the dot plot—suggest only modest policy easing next year, with policymakers anticipating potentially one more cut in 2026 and a further reduction in 2027, while long-term rates are expected to stabilize.

Fed Chair Jerome Powell noted that while inflation has eased from earlier peaks, it remains somewhat elevated and the labor market shows signs of slowing, underscoring the cautious approach to further rate adjustments.

Analysts say the outlook for gold in 2026 will depend on a mix of Fed policy direction, inflation trends, and broader economic conditions. After a historic 2025 in which gold prices climbed significantly—driven by rate cuts, geopolitical tensions, and central bank purchases—many experts believe the metal could continue to see demand as a portfolio hedge, though the pace of gains may moderate.

Investors will also be watching upcoming U.S. economic data, including jobs reports and inflation figures, for additional clues about the Fed’s next moves and how they might influence precious metals and broader financial markets. (ILKHA)