By Antonio Di Giacomo, Senior Market Analyst at XS.com
Gold once again solidly surpassed $4,200 per ounce, driven by the weakness of the U.S. dollar and the decline in Treasury yields. This advance comes amid renewed
demand for safe-haven assets and a macroeconomic backdrop that favors the precious metal, following U.S. labor data that showed a sharper-than-expected slowdown, including a 32,000-job loss in the ADP report.
The prospect of further rate cuts by the Federal Reserve has been a key catalyst behind the rally. Markets expect an additional cut in December and foresee a broader easing cycle into 2026, implying lower real yields for an extended period. In this environment, the opportunity cost of holding gold decreases, enhancing its appeal.
The metal has now posted four consecutive monthly gains, highlighting its defensive nature during periods of reduced economic clarity. After the November correction, every pullback was viewed as a buying opportunity, especially as concerns increased that the global economic slowdown could be deeper than initially expected.
Structural demand is also playing a decisive role. Central banks continued to increase their gold reserves in 2024 and 2025, driven by the need to diversify their asset portfolios amid trade and monetary tensions. This trend has created a demand floor that reduces volatility and smooths out selling episodes, reinforcing market stability.
Geopolitical factors add further support. Tensions between Russia and Ukraine, conflicts in the Middle East, and supply chain fragmentation have boosted demand
for safe-haven assets. Although progress in peace talks or a sudden improvement in global sentiment could limit gold’s momentum, the lack of definitive solutions
continues to underpin its price.
Forecasts for the next two years continue to support the bullish narrative. Some institutions anticipate average prices above $4,400 by 2026, with potential rallies
toward $5,000 if a weak dollar, low real yields, and persistent geopolitical tensions continue. While not guaranteed, these scenarios reflect a structural shift in how the market values global risks.
However, downside risks remain. If the U.S. economy were to surprise with significantly stronger data, or if the Fed adopted a less dovish tone than expected, the dollar could strengthen and put pressure on gold. Likewise, a rapid easing of geopolitical tensions would reduce safe-haven demand. Even so, recent evidence shows that buyers consistently re-enter the market after any significant correction. In conclusion, gold’s rally above $4,200 per ounce reflects a powerful combination of dollar weakness, expectations of rate cuts, softer economic data, and a complex geopolitical landscape. Although risks persist, the strength of demand during each pullback and the prospect of a more flexible monetary policy heading into 2026 suggest the metal may be entering a prolonged phase of structural support and sustained appreciation.