(Kitco News) - Growing expectations that muted inflation and softening economic activity will force the Federal Reserve to ease interest rates aggressively in the new year are providing fresh bullish momentum for gold.
The precious metal is on track to post another record weekly close, with prices testing resistance near $4,300 an ounce. Gold is poised to finish the week up roughly 2.5%.
Lukman Otunuga, Senior Market Analyst at FXTM, said gold’s momentum remains firmly bullish, with prices targeting higher levels.
“A solid move above this point could open doors toward $4400 and higher. Weakness below $4300 may trigger a selloff back toward $4240 and $4200,” he said. “With markets pricing at least two US rate cuts next year, bulls have a foundation to rely on. A broadly weaker dollar and central bank buying may fuel upside gains deep into 2026.”
While gold is attracting renewed momentum, analysts caution that the start of the holiday season could amplify volatility. Thin trading volumes during the final full trading week of 2025 may distort technical signals and lead to sharp price swings.
Aaron Hill, Chief Market Analyst at FP Markets, said he expects gold to trade in a wide range between $4,250 and $4,380 an ounce.
“Thin liquidity will make it jerky — one quiet night and you wake up 60 dollars away from where you fell asleep — but the bias stays up,” he said. “I’ll be watching 4255 as the line in the sand. Lose that and we can slide fast to $4,200 in this low-volume environment, but as long as it holds, I’m treating every dip as a gift.”
Adding to the potential volatility, the U.S. Labor Department will release October and November employment data next week, along with November inflation figures.
According to consensus estimates, economists expect 50,000 jobs were created last month, signaling a continued slowdown in the labor market. At the same time, the Consumer Price Index is forecast to rise above 3%.
Commodity analysts said the data backdrop remains supportive for gold, as weakening economic activity increases pressure on the Federal Reserve to begin cutting interest rates.
Outside North America, both the Bank of England and the European Central Bank are set to hold their final monetary policy meetings of the year. The BoE is widely expected to ease interest rates again, while markets anticipate the ECB will remain on hold.
With ECB policy likely to support the euro through year-end, analysts said they will be watching for further weakness in the U.S. dollar to provide one final tailwind for gold before the close of 2025.
Economic data to watch next week
Monday: US Empire State Manufacturing Survey
Tuesday: US Nonfarm Payrolls; US Retail Sales, Flash PMI Survey
Thursday: Bank of England monetary policy meeting, European Central Bank monetary policy meeting, US weekly jobless claims; US CPI; Philly Fed Manufacturing Survey
Friday: U.S. Existing Home Sales
