Gold Monthly for December 2025

After a series of events and a strong rally in October 2025, gold demonstrated a mixed performance in November 2025, moving back and forth within a defined range. As the month approached its end, gold gradually moved higher and recorded a month-on-month gain of 5.71%. On the last day of the month, Gold traded around $4230 per troy ounce. After reaching fresh all-time highs and then experiencing a pullback in October 2025, the yellow metal found solid support near the $4,000 level. As buyers attempted to regain control, prices touched a mid-month high of $4,248 before settling at slightly lower levels.

In November 2025, ongoing uncertainty and divided expectations regarding further Federal Reserve rate cuts fostered a cautious market environment, while the reopening of the U.S. government after a 43-day shutdown offered temporary stability. Structural demand from central banks, along with continued institutional and investor purchases, provided additional support.

The dollar appeared to regain investor confidence as questions emerged regarding a potential rate cut in December 2025. The dollar index briefly crossed the 100 mark after remaining under pressure for several months. However, it was unable to maintain these levels, fluctuating throughout the month and trading around 99.4 on the last day of November 2025, marking a decline of 0.36%. The rupee touched a fresh all-time low of 89.64 before ending the month at 89.36, depreciating by 0.66%.

Outlook:

Amid growing uncertainty regarding a potential Federal Reserve rate cut in December 2025, market volatility may increase during the first week of the month as the year-end Fed meeting approaches. Following the FOMC (Federal Open Market Committee) decision, once the market establishes a clearer trajectory, a seasonal slowdown may emerge as the holiday season begins in the West. Furthermore, a phase of profit-taking by investors at elevated levels ahead of the holidays cannot be ruled out and may exert some downward pressure on prices. From a longer-term perspective, gold continues to be in a favourable position and remains a preferred asset for investors in the current environment.

Federal Reserve and Monetary Policy:

The Federal Reserve has already reduced repo rates by 50 basis points this year across two meetings. After announcing a 25-basis-point cut in October 2025, Fed Chair Jerome Powell highlighted the uncertainty surrounding a potential December reduction, leaving market opinions divided. Although the government shutdown has ended, the latest data on inflation and the labour market is yet to be released, leaving the Fed which relies heavily on data to guide its decisions, in an obscure state. As mentioned previously, we still believe another 25-basis-point rate cut may still be on the cards. However, rather than the rate cut announcement itself, the market will closely watch Fed Chair Powell’s comments to assess what stance does the central bank adopt whether dovish or hawkish going further.

After cutting rates by 1% in 2024, the Fed had indicated in its December 2024 meeting that it would implement fewer rate cuts this year; however, evolving conditions forced it to adopt a more aggressive approach. With only six months remaining in office for Jerome Powell, attention will shift to how the transition to a new Federal Reserve Chair, likely to be appointed by President Trump, may influence the relationship between the government and the independence of the central bank.

Inflation and Labour Market:

Rising inflation and a weakening labour market have posed challenges for the Federal Reserve for quite some time now. However, the current situation remains unassessed as official data has been delayed due to the government shutdown. The last reported CPI for September 2025 stood at 3.00%, while October 2025 figures are yet to be released. A modest increase in the upcoming data would not be surprising, given the trickling impact of Trump tariffs.

Amid reports of job cuts, the Bureau of Labor Statistics released non-farm payroll data for September 2025, showing the addition of 119,000 new jobs, with the unemployment rate marginally changing to 4.4%. US Consumer Sentiment as measured by the University of Michigan is near a 10-year low of Michigan is near a 10-year low, reflecting low growth expectations.

Trump has proposed sending a $2,000 “tariff dividend check” to most Americans next year and implementing income-tax reductions, while the Federal Reserve is widely expected to ease monetary conditions. Together, these policies are likely to propell the next leg of bull market in gold and potentially drive even stronger price gains across industrial commodities.

As the Fed juggles to maintain balance between inflation control and labour market support, any further reduction in repo rates could exert additional pressure on inflation. This environment continues to underpin the bullish momentum in the gold market and is expected to provide ongoing support to prices.

Debt and Deficit:

The U.S. Treasury’s October Monthly Statement indicates that the recent government shutdown did not help reduce the federal deficit, with government spending continuing to outpace revenue growth. The United States opened the 2026 fiscal year with a federal deficit of $284 billion in October, nearly 10% higher than the previous year. Although this figure was supported in part by record tariff revenues, it was also shaped by a significant shift in benefit payments and delays caused by the 43-day federal shutdown.

While the trade deals and tariffs introduced under President Trump were intended to narrow the deficit by increasing revenue, the latest data shows that their effect has not materialized. Instead, higher revenue collections alongside rising government expenditures have added further pressure on inflation, underscoring the fiscal challenges facing the U.S. economy.

The total debt held by US now stands close to $38 Trillion. Meanwhile, interest costs on federal debt climbed to $104 billion, a 27% increase from a year earlier, due to a higher debt load. The rising debt and increasing deficit have negatively impacted the treasury yields in the US and subsequently exerted pressure on the dollar. This has been one of the major contributors in fuelling the current rally in gold exacerbated by policy uncertainty.

In Conclusion:

As we approach the end of the calendar year, the evolution of the key drivers and underlying conditions influencing gold has been particularly notable. The yellow metal has appreciated by 61.24% year-to-date, outperforming all major asset classes. In the short term, its trajectory is likely to be shaped by the Federal Reserve’s upcoming decision and policy stance as it evaluates the U.S. macroeconomic environment and determines the direction of repo rates. Additionally, the holiday season and profit-booking at elevated levels may exert temporary downward pressure on prices, which would be good buying opportunity to build an allocation. The downsides would certainly be capped by the underlying bullish factors, and the probability of more downsides is reducing.

From a longer-term perspective, gold remains well supported amid growing structural and fundamental challenges within the U.S. economy. Continued central-bank accumulation and strong ETF inflows from investors are expected to sustain demand. Meanwhile, following a strong rally in U.S. equity and cryptocurrency markets, there are early indications that investors may begin reallocating capital as the valuations appear stretched. This potential shift toward relatively safer assets could further bolster gold’s appeal and support its prices going forward.

Above article is authored by Quantum.

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