Gold prices fell in European trading on Wednesday, resuming their losses that had briefly paused in the previous session, and touching a two-week low, as renewed correction and profit-taking activity emerged in the final trading sessions of the year, under pressure from a stronger US dollar against a basket of global currencies.

Despite the modest pullback at year-end, the precious metal gold is preparing to post its strongest annual performance since 1979, supported by exceptional and record-breaking demand for gold bullion as one of the most prominent safe-haven assets, amid geopolitical turmoil and global economic shifts that made gold the preferred vehicle for wealth protection in 2025.

Price Overview

• Gold prices today: gold fell by 1.5% to $4,274.23, the lowest level since December 16, from an opening level of $4,339.10, after posting an intraday high at $4,373.24.

• At Tuesday’s settlement, the precious metal edged up 0.2%, after suffering a sharp 4.45% decline on Monday, its largest daily loss since last October, driven by accelerated correction and profit-taking from the all-time high of $4,550.04 per ounce.

US Dollar

The US dollar index rose by more than 0.2% on Wednesday, extending its gains for a second consecutive session and reaching a one-week high at 98.44 points, reflecting continued strength in the US currency against a basket of major and secondary currencies.

According to the minutes of the Federal Reserve’s latest meeting, held on December 9–10 and released on Tuesday, the US central bank agreed to cut interest rates following an in-depth discussion of the risks facing the US economy.

The minutes revealed that the decision to cut rates by 25 basis points to a 3.75% range, the lowest since 2022, faced significant opposition, with nine members voting in favor and three dissenting — the largest number of dissents since 2019.

The minutes also indicated a preference for caution in upcoming meetings, as some participants suggested that keeping rates unchanged “for some time” after the December cut would be the most appropriate option.

The Federal Open Market Committee projected only one additional interest rate cut throughout 2026, signaling a more cautious and hawkish approach compared with earlier expectations.

US Interest Rates

• According to the CME FedWatch Tool, market pricing for keeping US interest rates unchanged at the January 2026 meeting stands at 84%, while the probability of a 25-basis-point cut is priced at 16%.

• 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.

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

Gold Outlook

Independent analyst Ross Norman said gold is experiencing sharp price swings driven by profit-taking as well as the opening of new positions. He added that higher margin requirements at the Chicago Mercantile Exchange have likely curbed the large upside moves that had been expected in precious metals.

Norman also noted that tariffs, the desire to build domestic inventories, and fragile supply chains have all highlighted the strategic importance of certain key metals.

He added that in 2026, the repercussions of these factors will become clearer, not only through higher prices as countries compete to build strategic stockpiles, but also through alternative mechanisms to secure essential commodities.

Annual Performance

Over the course of 2025, which officially ends with today’s settlement, the precious metal gold is up by more than 64%, on track to achieve its third consecutive annual gain and its largest annual increase since 1979.

Drivers Behind This Historic Outperformance

• Central bank buying: the most significant factor was the continued accumulation of gold reserves by central banks worldwide at unprecedented record levels. This shift toward de-dollarization and diversification away from fiat currencies created strong and persistent structural demand, largely insulated from short-term speculative fluctuations.

• Global monetary environment: gold benefited strongly from the shift by major central banks, led by the Federal Reserve, toward interest rate cuts. As gold yields no income, lower rates reduce the opportunity cost of holding it, prompting large investment funds to redirect substantial liquidity from bonds into the yellow metal.

• Escalating geopolitical tensions: amid political instability and conflicts throughout 2025, gold’s role as a trusted global safe haven intensified, with investors and institutions turning to it as protection against wars, economic sanctions, and sudden financial market volatility.

• Inflation hedging: with persistent inflationary pressures and rising global sovereign debt, fiat currencies lost part of their purchasing power, driving individuals and institutions to increase demand for physical gold bars and coins as a tangible store of value and a safeguard against potential economic breakdowns.

• Physical scarcity and production constraints: the mining sector faced difficulties expanding global output in 2025 due to depletion at major mines and rising extraction costs. This relatively stable supply against surging demand provided additional fuel for gold prices to break above historic levels beyond $4,000 per ounce.

• Weakness of the US dollar: driven by Federal Reserve rate cuts, growing concerns about financial stability in the United States, volatile trade policies under Donald Trump, and rising doubts about the Federal Reserve’s independence under the Trump administration.

SPDR Gold Trust

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Tuesday, keeping total holdings at 1,071.99 metric tons, the highest level since June 21, 2022.

The euro fell in European trading on Wednesday against a basket of global currencies, deepening its losses for a second consecutive session against the US dollar and hitting a one-week low, amid relatively active demand for the US currency, especially after the release of the Federal Reserve’s latest meeting minutes, which revealed a sharp division among officials over the December interest rate cut.

Despite this pullback, the single European currency, the euro, is on track to record its largest annual gain since 2017. These gains are supported by a combination of factors, most notably improving economic growth indicators across the euro area, the relatively hawkish monetary stance adopted by the European Central Bank during the second half of the year, and the broad weakness that dominated the performance of the US dollar in global markets.

Price Overview

• Euro exchange rate today: the euro fell 0.15% against the dollar to 1.1733, its lowest level since December 22, from an opening level of 1.1748, after recording a session high at 1.1749.

• The euro ended Tuesday’s session down 0.2% against the dollar, marking its third loss in the past four days, pressured by the Federal Reserve minutes.

US Dollar

The US dollar index rose by more than 0.1% on Wednesday, extending its gains for a second consecutive session and reaching a one-week high at 98.33 points, reflecting continued strength in the US currency against a basket of global currencies.

According to the minutes of the Federal Reserve’s latest meeting, held on December 9–10, the US central bank agreed to cut interest rates following in-depth discussions about the risks facing the US economy.

The minutes showed that the decision to cut rates by 25 basis points to a 3.75% range, the lowest since 2022, faced significant opposition, with nine members voting in favor and three voting against — the largest number of dissents since 2019.

The minutes also pointed to a tendency toward caution in upcoming meetings, as some participants suggested that keeping rates unchanged “for some time” after the December cut would be the most appropriate course of action.

The Federal Open Market Committee projected only one additional interest rate cut throughout 2026, signaling a more cautious and hawkish approach compared with earlier expectations.

According to the CME FedWatch Tool, market pricing for keeping US interest rates unchanged at the January 2026 meeting stands at 84%, while the probability of a 25-basis-point cut is priced at 16%.

European Interest Rates

• Money market pricing for a 25-basis-point interest rate cut by the European Central Bank in February 2026 remains stable at below 10%.

• To reprice these expectations, investors are awaiting further economic data from the euro area on inflation, unemployment, and wages.

Interest Rate Differential

Following the Federal Reserve’s latest decision, the interest rate gap between Europe and the United States narrowed to 160 basis points in favor of US rates, the smallest differential since May 2022, which supports the upside potential for the euro against the US dollar.

Annual Performance

Over the course of 2025, which officially ends with today’s settlement, the single European currency, the euro, is up by more than 13% against the US dollar, on track to record its second annual gain in the past three years and its largest annual increase since 2017.

Drivers Behind This Historic Outperformance

• Resilience of the European economy: the euro area posted stronger-than-expected economic growth in 2025, particularly with a rebound in industrial and commercial activity in Germany, the region’s largest economy.

• European Central Bank policy: contrary to expectations, the ECB maintained a relatively hawkish stance compared with the Federal Reserve, especially during the second half of the year, preserving the euro’s appeal as a higher-yielding and more stable currency.

• Weakness of the US dollar: driven by Federal Reserve rate cuts, rising concerns about financial stability in the United States, volatile trade policies under Donald Trump, and growing worries about the Federal Reserve’s independence under the Trump administration.

The Japanese yen declined in Asian trading on Wednesday against a basket of major and minor currencies, remaining in negative territory for a second consecutive session versus the US dollar, amid renewed demand for the greenback, which extended its gains to a one-week high after the release of the Federal Reserve minutes showed a sharp division among officials over the December interest rate cut.

In the final trading sessions of 2025, currency markets are broadly calm due to low liquidity caused by New Year holidays, as traders look ahead after a difficult year for some major currencies, led by the US dollar.

Price Overview

• Japanese yen today: the dollar rose 0.2% against the yen to 156.64, from an opening level of 156.33, with the session low recorded at 156.30.

• The yen ended Tuesday’s trading down 0.2% against the dollar, marking its second loss in the past three sessions, pressured by the Federal Reserve minutes.

US Dollar

The US dollar index rose by more than 0.1% on Wednesday, extending its gains for a second consecutive session and hitting a one-week high at 98.33 points, reflecting continued strength in the US currency against a basket of global currencies.

According to the minutes of the Federal Reserve’s latest meeting, held on December 9–10, the US central bank agreed to cut interest rates following in-depth discussions over the risks facing the US economy.

The minutes revealed that the decision to cut rates by 25 basis points to a 3.75% level, the lowest since 2022, faced significant opposition, with nine members voting in favor and three voting against — the largest number of dissents since 2019.

The minutes also pointed to a more cautious Fed stance in upcoming meetings, with some participants suggesting that keeping rates unchanged “for some time” after the December cut would be the most appropriate option.

The Federal Open Market Committee projected only one additional rate cut throughout 2026, signaling a more cautious and hawkish approach compared with earlier expectations.

According to the CME FedWatch Tool, market pricing for keeping US interest rates unchanged at the January 2026 meeting stands at 84%, while the probability of a 25-basis-point cut is priced at 16%.

Japanese Interest Rates

• On Monday in Tokyo, the summary of opinions from the Bank of Japan’s latest monetary policy meeting — held on December 18–19 — was released, confirming a rate hike to 0.75%, the highest level since 1995.

• The summary showed a clear hawkish shift among most board members, with many highlighting the need for further rate increases ahead. They agreed that gradually raising rates and scaling back monetary stimulus are necessary to ensure long-term price stability.

• Market pricing for a quarter-percentage-point rate hike by the Bank of Japan at its January meeting remains steady at around 20%.

• To reprice these expectations, investors are awaiting further Japanese data on inflation, unemployment, and wage growth.

The US Federal Reserve on Tuesday released the minutes of its sharply divided meeting earlier this month, which concluded with a vote to cut interest rates again — a decision that appears to have been far closer than the final vote suggested.

The minutes, published a day earlier than usual due to the New Year holiday, showed that officials expressed a wide range of views during the December 9–10 meeting.

Ultimately, the Federal Open Market Committee (FOMC) voted 9–3 to cut the policy rate by a quarter of a percentage point, marking the largest number of dissenting votes since 2019, amid intense debate over the need to support the labor market versus concerns about inflation. The decision lowered the benchmark interest rate to a range of 3.5%–3.75%.

According to the minutes, “most participants judged that further downward adjustments to the target range for the federal funds rate would likely be appropriate if inflation continued to move down over time as expected.”

That view, however, was accompanied by clear reservations about the pace and timing of any additional moves.

The minutes added: “Regarding the extent and timing of additional adjustments to the target range, some participants noted that, given their economic outlooks, it could be appropriate to maintain the target range at its current level for some time following the reduction at this meeting.”

Officials expressed confidence that the economy would continue to grow at a “moderate” pace, while identifying downside risks to employment and upside risks to inflation. Differing assessments of these risks contributed to the division within the committee, with indications that the outcome could have gone either way despite the majority in favor of the cut.

The minutes revealed that “a few participants who supported the reduction in the target range at this meeting indicated that the decision was very finely balanced, or that they could have supported leaving the target range unchanged.”

The vote coincided with the quarterly update to the Summary of Economic Projections, including the closely watched dot plot showing each official’s expectations for the path of interest rates.

Projections from the 19 officials who attended the December meeting — including 12 voting members — pointed to the likelihood of one additional rate cut in 2026 followed by another in 2027, potentially bringing the policy rate down to around 3%, a level officials view as “neutral,” meaning neither restrictive nor stimulative for economic growth.

Those who favored leaving rates unchanged “expressed concern that progress toward the Committee’s 2% inflation objective may have stalled in 2025, or indicated a need for greater confidence that inflation was moving sustainably toward the target.”

Officials acknowledged that tariffs imposed by US President Donald Trump had contributed to higher inflation, but largely agreed that the effect would be temporary and likely fade during 2026.

Since the vote, economic data have shown that the labor market continues to experience slower hiring without a sharp acceleration in layoffs. Inflation has continued to ease gradually but remains above the Federal Reserve’s 2% target.

At the same time, the broader economy has continued to perform strongly. Gross domestic product grew at an annualized rate of 4.3% in the third quarter, beating expectations and accelerating by about half a percentage point from the already solid pace seen in the second quarter.

However, much of the data come with an important caveat. Some reports remain delayed as government agencies complete data collection following the shutdown period, and even more recent releases are being treated with caution due to these gaps.

As a result, markets largely expect the committee to keep interest rates unchanged over the next few meetings while awaiting additional data. The holiday period has been marked by limited public commentary from Fed officials, and the few available remarks have reflected a high degree of caution heading into the new year.

The composition of the committee is also set to change, with four new regional bank presidents taking on voting roles:

Beth Hammack, president of the Cleveland Fed, who opposed not only any additional cuts but also a prior reduction;

Anna Paulson, president of the Philadelphia Fed, who has voiced concerns about inflation;

Lorie Logan, president of the Dallas Fed, who has expressed reservations about cutting rates;

Neel Kashkari, president of the Minneapolis Fed, who said he would not have voted in favor of the October cut.

At the same meeting, the committee also voted to resume bond purchases. Under the new arrangement, the Fed will purchase short-term Treasury bills in an effort to ease pressures in short-term funding markets.

The central bank began the program with monthly purchases of $40 billion in Treasury bills, planning to maintain that pace for several months before gradually tapering it. A previous effort to shrink the balance sheet had reduced the Fed’s holdings by about $2.3 trillion, bringing them down to the current level of $6.6 trillion.

The minutes noted that failing to resume purchases — referred to in markets as quantitative easing — could result in “significant declines in reserves” to levels below what the Federal Reserve considers “ample” for the banking system.