Gold Surges to 2-Week Highs as Fed Rate Cut Hopes Drive Rally
Spot gold climbed 1.2% on Friday to reach its highest level in two weeks, positioning itself for a fourth consecutive monthly advance. The precious metal has demonstrated remarkable resilience, rising in nine of the past ten months and delivering over 60% gains year-to-date.
At current trading levels around $4,211 per ounce, gold is on track for its biggest weekly gain since mid-October. U.S. gold futures maturing in February gained over 1% to $4,244 per ounce, reflecting strong institutional confidence in the metal's trajectory.
Federal Reserve Policy Expectations Drive Momentum
Market speculation surrounding a potential Federal Reserve rate cut on December 10 has significantly boosted sentiment for precious metals. According to CME FedWatch data, there is now an 86.9% probability of a 25-basis-point rate cut at the upcoming meeting, up from 71% just one week ago.
This monetary policy outlook has created favorable conditions for gold and silver investments. Spot silver reached fresh highs of $55.86 per ounce earlier today, surpassing the previous record of approximately $54.50 set on October 17.
Lower interest rates typically benefit precious metals by reducing borrowing costs and weakening the dollar, making gold more attractive to international investors. This fundamental relationship continues to support the current rally.
Institutional Investors Remain Bullish on Long-Term Prospects
A recent Goldman Sachs survey of over 900 institutional clients reveals overwhelming optimism about gold's future performance. Remarkably, 36% of respondents expect gold to exceed $5,000 per ounce by the end of 2026, while another 33% anticipate prices between $4,500 and $5,000.
More than 70% of institutional investors surveyed anticipate higher prices next year, with only a small minority expecting a pullback to the $3,500 to $4,000 range. This confidence reflects gold's proven track record as a store of value during periods of economic uncertainty.
Major investment banks have adjusted their targets accordingly. UBS recently lifted its mid-2026 gold target to $4,900 per ounce from $4,700, citing continued Federal Reserve rate cuts, lower real yields, and persistent geopolitical risks as supporting factors.
Technical Trading Disruption
Friday's trading session experienced temporary disruption when a technical outage at CME Group, the world's largest derivatives exchange, halted trading across all markets. The issue, caused by a cooling problem at a CyrusOne data center in Chicago, was resolved without lasting impact on market sentiment.
Exchange-Traded Fund Performance
The SPDR Gold Shares ETF gained 1% to $387.2 on Friday, with retail sentiment shifting from bearish to neutral. The iShares Gold Trust maintained neutral sentiment territory over the past 24 hours, indicating steady investor confidence.
Gold's remarkable performance this year, breaking above the $4,000 mark for the first time on October 8, demonstrates the metal's enduring appeal as both an inflation hedge and safe-haven asset. With continued monetary policy uncertainty and geopolitical tensions, institutional and retail investors alike are positioning for sustained precious metals strength heading into 2026.