Gold about to trade above $4500 for first time ever

Gold prices rose in European trading on Tuesday, extending gains for a third consecutive day and continuing to smash record levels, as they moved sharply closer to trading above $4,500 per ounce for the first time in history. The rally was driven by strong investment demand for the precious metal and supported by a decline in the US dollar in foreign exchange markets.

These developments come as expectations grow that the Federal Reserve will cut US interest rates twice next year. To reprice those expectations, investors are awaiting later today the release of US economic growth data for the third quarter.

Price overview

Gold prices today: gold rose about 1.25% to $4,497.86 per ounce, marking a new all-time high, from an opening level of $4,443.38, while the session low stood at $4,443.38.

At Monday’s settlement, gold prices jumped 2.4%, marking a second consecutive daily gain, after breaking above the $4,400-per-ounce level for the first time ever.

US dollar

The dollar index fell 0.2% on Tuesday, extending losses for a second straight session and hitting a one-week low, reflecting continued weakness in the US currency against a basket of major and minor currencies.

As is well known, a weaker US dollar makes dollar-priced gold bullion more attractive to buyers holding other currencies.

The decline comes amid increased dollar selling ahead of the Christmas and New Year holidays, and under pressure from cautious comments by some Federal Reserve officials highlighting growing concern over weakness in US labor market indicators.

US interest rates

According to the CME FedWatch tool, pricing for keeping US interest rates unchanged at the January 2026 meeting currently stands at 78%, while the probability of a 25-basis-point rate cut is priced at 22%.

Investors are currently pricing in two US rate cuts over the course of next year, while Federal Reserve projections point to only one 25-basis-point cut.

US economic growth

To reprice the above expectations, investors are awaiting later today the release of US third-quarter GDP data, which was delayed due to the US government shutdown.

The preliminary GDP reading is due at 13:30 GMT and is expected to show growth of 3.2% in the third quarter, compared with 3.8% growth in the second quarter.

Gold outlook

Tim Waterer, chief market analyst at KCM Trade, said that tensions between the United States and Venezuela are keeping gold in focus as a hedge against uncertainty.

Waterer added that gold has posted strong gains this week as part of a broader shift in investor positioning, alongside expectations of further easing in US interest rates.

He noted that buyers continue to view precious metals as an effective tool for portfolio diversification and value preservation, adding that he does not believe gold or silver have reached their peaks yet.

Frank Walbaum, market analyst at NAGA, said that with year-end approaching and liquidity thinning, price volatility could intensify, noting that gold may remain particularly sensitive to geopolitical developments and changes in interest rate expectations.

Michael Brown, chief strategist at Pepperstone, said that some sideways movement could occur during the holiday period due to reduced market liquidity.

Brown added that the rally is expected to resume with strong momentum once trading volumes return to normal levels, noting that $5,000 is a natural target for gold next year, while $75 represents a long-term target for silver.

SPDR fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by about 12.02 metric tons on Monday, marking the biggest daily increase since October 17, lifting total holdings to 1,054.56 metric tons — the highest level since June 23, 2022.