Gold prices climbed to a fresh all-time high on Monday, extending a strong rally driven by the U.S. Federal Reserve’s latest interest rate cut and continued buying by global central banks looking to reduce their reliance on the U.S. dollar.
Spot gold rose to $4,350 per ounce during the session, marking its fifth straight day of gains. Gold futures briefly reached $4,384 per ounce, just shy of the previous record set in October. Over the past week, gold has gained about 3.8%, while year-to-date prices are up roughly 66%, making this its strongest annual performance since 1979.
Fed Rate Cut Boosts Gold’s Appeal
Gold’s recent surge picked up momentum after the Federal Reserve cut its benchmark interest rate by 25 basis points, bringing the target range to 3.50%–3.75%. This marked the third consecutive rate reduction since September.
Lower interest rates reduce the opportunity cost of holding assets like gold, which do not pay interest. As returns on bonds and cash decline, gold often becomes more attractive to investors seeking stability and inflation protection.
Goldman Sachs reaffirmed its long-term bullish outlook, maintaining its forecast that gold could reach $4,900 per ounce by the end of 2026. The investment bank cited “significant upside risk” if buying from private investors accelerates alongside central bank demand. Goldman expects central banks to purchase around 880 tonnes of gold in 2025 and 870 tonnes in 2026, levels well above historical averages.
Weaker Dollar and Falling Yields Add Support
Gold prices were also supported by a softer U.S. dollar and lower Treasury yields. The ICE U.S. Dollar Index slipped to around 98.40, while yields on 10-year U.S. Treasury bonds declined to approximately 4.19%.
A weaker dollar typically boosts gold prices because it makes the metal cheaper for buyers using other currencies. At the same time, falling bond yields reduce competition from interest-bearing assets, further strengthening gold’s appeal.
Central Banks Drive Long-Term Demand
Central banks continue to play a major role in supporting gold prices. According to data compiled through October 2025, central banks added roughly 254 tonnes of gold this year alone.
The National Bank of Poland led global purchases in 2025 with about 67 tonnes, followed by Azerbaijan with more than 26 tonnes and Kazakhstan with around 25 tonnes. Data from the World Gold Council shows that central banks have bought nearly 1,000 tonnes of gold per year over the past three years—roughly double the annual pace seen during the previous decade.
Market analysts say these purchases reflect efforts by emerging-market economies to diversify reserves and reduce exposure to the U.S. dollar.
“We see this trend being driven by central banks around the world, particularly in emerging markets such as China, India, and Russia, as they look to hedge their currencies against the dollar,” said John Stoltzfus, Chief Investment Strategist at Oppenheimer, in comments to Yahoo Finance.
ETF Inflows Signal Strong Investor Interest
Investor demand has also been evident in gold-backed exchange-traded funds. Gold ETFs attracted approximately $77 billion in net inflows in 2025, highlighting strong participation from institutional and retail investors.
The SPDR Gold Trust, the world’s largest gold-backed ETF, is up about 62% year-to-date through December, reflecting both rising gold prices and sustained investor confidence in the metal as a long-term store of value.
With interest rates trending lower, central banks continuing to buy aggressively, and the U.S. dollar under pressure, analysts expect gold to remain well-supported in the near to medium term. While short-term volatility remains possible, structural demand and macroeconomic conditions continue to favor gold’s longer-term outlook.
