Gold prices fell by nearly 2% in the European market on Monday at the start of the final trading week of 2025, retreating from their all-time highs amid accelerating correction and profit-taking activity, in addition to pressure from the continued recovery of the US dollar in foreign exchange markets.
The decline was also driven by reduced safe-haven demand following positive developments in peace talks between Russia and Ukraine, after US President Donald Trump said that both Vladimir Putin and Volodymyr Zelenskyy are showing genuine willingness to reach an agreement to end the war, noting that negotiations have entered their final stages.
Price Overview
• Gold prices today: Gold fell by about 2.0% to $4,445.16, from an opening level of $4,533.42, after recording an intraday high of $4,549.77.
• At Friday’s settlement, gold prices rose by 1.2%, marking a fresh all-time high at $4,550.04 per ounce.
• Gold prices gained 4.5% last week, posting a third consecutive weekly increase and the largest weekly gain since last October, supported by hopes that the Federal Reserve will continue cutting interest rates in 2026.
US Dollar
The US dollar index rose by 0.1% on Monday, extending its gains for a third consecutive session and continuing its recovery from two-and-a-half-month lows, reflecting a broader rebound in the US currency against a basket of major and secondary currencies.
In addition to buying from lower levels, the dollar’s recovery ahead of year-end trading has been supported by short-covering activity, as the US currency approaches its largest annual loss since 2017.
Positive Developments
Following the recent meeting between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy, expectations have risen for tangible progress toward ending the war in Ukraine.
Trump said after the meeting in Florida that both the Russian and Ukrainian sides “want to reach an agreement,” adding that talks have entered a sensitive and advanced phase.
He acknowledged that some outstanding issues still require careful handling, but expressed optimism about the possibility of reaching a settlement in the coming period, boosting market hopes for a geopolitical breakthrough that could support global stability.
US Interest Rates
• According to the CME FedWatch Tool, pricing for the probability of keeping US interest rates unchanged at the January 2026 meeting currently stands at 82%, while the probability of a 25 basis point rate cut is priced at 18%.
• Investors are currently pricing in two US interest rate cuts over the course of next year, while Federal Reserve projections point to a single 25 basis point cut.
• To reprice these expectations, investors are closely monitoring upcoming US economic data, in addition to comments from Federal Reserve officials.
Gold Outlook
Tim Waterer, Chief Market Analyst at KCM Trade, said that the $5,000 level appears to be an achievable target for gold next year, provided the next Federal Reserve chair adopts a more dovish approach to monetary policy.
Waterer added that interest rate cuts, along with continued strong industrial demand and supply constraints, could set the stage for silver to rally toward $100 per ounce in 2026.
SPDR Fund
Gold holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by about 2.86 metric tons on Friday, bringing total holdings to 1,071.13 metric tons, the highest level since June 22, 2022.
