Gold breaches $4500 for first time in history

Gold prices rose in European trading on Wednesday, extending gains for a fourth consecutive session and continuing to shatter record highs, after breaking above the $4,500-per-ounce level for the first time in history. The move was driven by strong investment demand for the precious metal, supported by continued declines in the US dollar in the foreign exchange market.

These developments come amid rising expectations that the Federal Reserve will cut US interest rates twice next year. To reprice those expectations, investors are later today awaiting US third-quarter economic growth data.

Price overview

• Gold prices today: Gold rose about 0.95% to $4,525.96 per ounce, an all-time high, from an opening level of $4,484.25, after touching a low of $4,467.84.

• At settlement on Tuesday, gold prices gained 0.9%, marking a third consecutive daily increase.

The US dollar

The US dollar index fell 0.1% on Wednesday, extending its losses for a third straight session and hitting a two-and-a-half-month low, reflecting continued weakness in the US currency against a basket of major and secondary currencies.

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

These losses come amid active selling of the dollar ahead of the Christmas and New Year holidays, and under pressure from cautious comments by some Federal Reserve officials, which highlighted growing concerns about weakness in the US labor market.

Eric Bregar, head of FX and precious metals risk management at Silver Gold Bull in Toronto, said the US dollar could decline next year, at least in the first quarter, as the Federal Reserve will increasingly be forced to acknowledge that the labor market is not in good shape.

Bregar added that the Fed may be compelled to make greater concessions on interest rate cuts, and at a faster pace than it has so far, noting that markets want rate cuts and that expectations are building for a new, more dovish Federal Reserve chair who would seek to deliver that outcome.

US interest rates

• According to the CME FedWatch tool, pricing for keeping US interest rates unchanged at the January 2026 meeting stands at 87%, while the probability of a 25-basis-point rate cut is priced at 13%.

• Investors are currently pricing two US rate cuts over the course of next year, while the Federal Reserve’s own projections point to just one 25-basis-point cut.

• To reprice these expectations, investors are closely monitoring further US economic data releases, along with comments from Federal Reserve officials.

Gold outlook

Analysts at Mitsubishi said that with precious metals hitting record prices at this late point in the year — a time when one would usually be writing a Christmas card or two — the key takeaway may be that investors have not treated the holiday period as an opportunity to take profits.

Zain Vawda, market analyst at OANDA’s MarketPulse, said that bets on interest rate cuts have increased following the latest US inflation and labor market data, which is supporting demand for precious metals.

Vawda added that demand for safe-haven assets is also expected to remain strong amid tensions in the Middle East, uncertainty over reaching a peace agreement between Russia and Ukraine, and recent US actions against Venezuelan oil tankers.

SPDR fund

Gold holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Tuesday, leaving total holdings steady at 1,054.56 metric tons, the highest level since June 23, 2022.