Gold prices fell in European trading on Wednesday, resuming their losses that had briefly paused in the previous session, and touching a two-week low, as renewed correction and profit-taking activity emerged in the final trading sessions of the year, under pressure from a stronger US dollar against a basket of global currencies.
Despite the modest pullback at year-end, the precious metal gold is preparing to post its strongest annual performance since 1979, supported by exceptional and record-breaking demand for gold bullion as one of the most prominent safe-haven assets, amid geopolitical turmoil and global economic shifts that made gold the preferred vehicle for wealth protection in 2025.
Price Overview
• Gold prices today: gold fell by 1.5% to $4,274.23, the lowest level since December 16, from an opening level of $4,339.10, after posting an intraday high at $4,373.24.
• At Tuesday’s settlement, the precious metal edged up 0.2%, after suffering a sharp 4.45% decline on Monday, its largest daily loss since last October, driven by accelerated correction and profit-taking from the all-time high of $4,550.04 per ounce.
US Dollar
The US dollar index rose by more than 0.2% on Wednesday, extending its gains for a second consecutive session and reaching a one-week high at 98.44 points, reflecting continued strength in the US currency against a basket of major and secondary currencies.
According to the minutes of the Federal Reserve’s latest meeting, held on December 9–10 and released on Tuesday, the US central bank agreed to cut interest rates following an in-depth discussion of the risks facing the US economy.
The minutes revealed that the decision to cut rates by 25 basis points to a 3.75% range, the lowest since 2022, faced significant opposition, with nine members voting in favor and three dissenting — the largest number of dissents since 2019.
The minutes also indicated a preference for caution in upcoming meetings, as some participants suggested that keeping rates unchanged “for some time” after the December cut would be the most appropriate option.
The Federal Open Market Committee projected only one additional interest rate cut throughout 2026, signaling a more cautious and hawkish approach compared with earlier expectations.
US Interest Rates
• According to the CME FedWatch Tool, market pricing for keeping US interest rates unchanged at the January 2026 meeting stands at 84%, while the probability of a 25-basis-point cut is priced at 16%.
• Investors are currently pricing in two US rate cuts over the course of next year, while Federal Reserve projections point to only one 25-basis-point cut.
• To reprice these expectations, investors are closely monitoring upcoming US economic data, along with comments from Federal Reserve officials.
Gold Outlook
Independent analyst Ross Norman said gold is experiencing sharp price swings driven by profit-taking as well as the opening of new positions. He added that higher margin requirements at the Chicago Mercantile Exchange have likely curbed the large upside moves that had been expected in precious metals.
Norman also noted that tariffs, the desire to build domestic inventories, and fragile supply chains have all highlighted the strategic importance of certain key metals.
He added that in 2026, the repercussions of these factors will become clearer, not only through higher prices as countries compete to build strategic stockpiles, but also through alternative mechanisms to secure essential commodities.
Annual Performance
Over the course of 2025, which officially ends with today’s settlement, the precious metal gold is up by more than 64%, on track to achieve its third consecutive annual gain and its largest annual increase since 1979.
Drivers Behind This Historic Outperformance
• Central bank buying: the most significant factor was the continued accumulation of gold reserves by central banks worldwide at unprecedented record levels. This shift toward de-dollarization and diversification away from fiat currencies created strong and persistent structural demand, largely insulated from short-term speculative fluctuations.
• Global monetary environment: gold benefited strongly from the shift by major central banks, led by the Federal Reserve, toward interest rate cuts. As gold yields no income, lower rates reduce the opportunity cost of holding it, prompting large investment funds to redirect substantial liquidity from bonds into the yellow metal.
• Escalating geopolitical tensions: amid political instability and conflicts throughout 2025, gold’s role as a trusted global safe haven intensified, with investors and institutions turning to it as protection against wars, economic sanctions, and sudden financial market volatility.
• Inflation hedging: with persistent inflationary pressures and rising global sovereign debt, fiat currencies lost part of their purchasing power, driving individuals and institutions to increase demand for physical gold bars and coins as a tangible store of value and a safeguard against potential economic breakdowns.
• Physical scarcity and production constraints: the mining sector faced difficulties expanding global output in 2025 due to depletion at major mines and rising extraction costs. This relatively stable supply against surging demand provided additional fuel for gold prices to break above historic levels beyond $4,000 per ounce.
• Weakness of the US dollar: driven by Federal Reserve rate cuts, growing concerns about financial stability in the United States, volatile trade policies under Donald Trump, and rising doubts about the Federal Reserve’s independence under the Trump administration.
SPDR Gold Trust
Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Tuesday, keeping total holdings at 1,071.99 metric tons, the highest level since June 21, 2022.
