Safe-haven demand grows ahead of key policy decision
Gold prices rose modestly on Monday as investor confidence strengthened around expectations that the Federal Reserve will cut interest rates at this week’s two-day policy meeting. Spot gold gained 0.3% to $4,208.40 per ounce, while U.S. gold futures for February slipped 0.1% to $4,238.
A softer U.S. dollar added support, making gold more attractive to overseas buyers. The dollar index edged lower, helping extend gains after a strong run in recent sessions. Analysts noted that ahead of the Fed decision, gold remains close to recent highs while holding a firm technical posture.
Markets price in a near-certain Fed cut
“Both gold and silver are in very strong near-term technical posture,” said Jim Wyckoff, senior analyst at Kitco Metals. “That’s inviting speculators to the long sides of those markets.” He added that prices are staying relatively steady before the Federal Open Market Committee meets Tuesday, with the rate decision coming Wednesday.
Markets widely expect a 25-basis-point cut, with traders assigning roughly a 90% probability, compared with about 66% just one month ago. Lower interest rates tend to boost gold’s appeal since the metal offers no yield and becomes more competitive as borrowing costs fall.
Fed Chair Jerome Powell will speak after the policy announcement, offering insight into how the central bank views inflation and growth as 2026 approaches.
Geopolitical tensions add further support
Gold also benefited from renewed geopolitical uncertainty. Ukrainian President Volodymyr Zelenskiy is meeting European leaders in London as Washington increases pressure on Kyiv to consider a proposed peace agreement with Russia. Periods of political or economic instability often drive demand for safe-haven assets such as gold.
Morgan Stanley maintains a bullish outlook on gold, citing several supportive factors including a weaker U.S. dollar, strong ETF inflows, persistent central bank buying and rising safe-haven interest.
Silver sets fresh records as momentum builds
Silver gained 0.1% to $58.35 per ounce after hitting a record $59.32 on Friday. Wyckoff noted that silver has recently taken the lead in the precious metals rally. “Silver is usually a follower of big brother gold, but the past few weeks silver has actually led the gold market,” he said.
He expects silver to break above $60 soon, with the possibility of testing $70 by year-end if current momentum holds.
