(Kitco News) - The gold market continues to see follow-through buying as prices hold above $4,100 an ounce, even as U.S. geopolitical tensions ease following the Senate’s passage of new funding legislation to end the longest government shutdown in history.
Although Congress has resolved one geopolitical issue, analysts note that there is still plenty of uncertainty to support gold’s safe-haven appeal. The Senate’s bill now goes to the House for a vote, where it is expected to pass.
Carsten Fritsch, Commodity Analyst at Commerzbank, noted that the government’s reopening might not come at an ideal time for the economy. Over the past two months, the U.S. government has published very little economic data, while private-sector data has been disappointing—showing a weakening labor market and persistently elevated inflation pressures.
Fritsch added that U.S. consumer confidence has fallen to a 3.5-year low.
“It is obviously expected that a significant slowdown in the US economy will become apparent once data publication resumes. This, in turn, could lead to more substantial Fed interest rate cuts,” he said.
Recent employment data from private payroll processor ADP showed anemic labor market momentum, with only 42,000 jobs created in October. However, a report from Challenger, Gray & Christmas revealed that U.S. employers cut more than 150,000 jobs that month—the biggest monthly reduction in over 20 years.
Fritsch said Commerzbank continues to expect the Federal Reserve will be forced to cut interest rates more aggressively than currently anticipated, which would provide further support for gold prices through 2026.
“We expect gold to reach USD 4,200 per troy ounce in the coming year. Silver is then likely to trade at USD 50 per troy ounce,” he said.
Commerzbank is not alone in its bullish outlook, given ongoing geopolitical uncertainty and weak economic activity.
Analysts at UBS’s Chief Investment Office also expect gold prices to reach $4,200 in 2026.
They noted that even as the government reopens, Congress has only provided funding through January.
“Partial shutdown remains a possibility after 30 January if Congress does not pass another continuing resolution or make progress on funding for other federal departments,” the analysts said. “Additionally, uncertainty around the Supreme Court’s ruling over the legality of tariffs based on the International Emergency Economic Powers Act (IEEPA) should provide ongoing support for gold.”
At the same time, UBS remains bullish on gold as global debt continues to rise at an unsustainable pace.
“Rising government debt around the world has increased investor concerns about fiscal sustainability and the potential for inflation or currency depreciation. As gold is often viewed as a store of value that protects against these risks, demand for bullion continues to climb steadily,” the analysts said.
