Gold steady as investors focus on US rate policy next year

Gold was steady as traders shifted focus from the US Federal Reserve’s near-certain rate cut this week to the pace of its monetary easing in 2026.

Bullion was trading just above $4,200 an ounce, having ended the previous session marginally down. 10-year Treasury yields climbed to the highest in more than two months on Monday, with investors facing a series of auctions as well as the Fed’s rate decision on Wednesday that may set policy expectations for next year.

Swap traders are expecting a quarter-point rate cut by the Fed but are now leaning toward two further moves by the end of 2026, down from three signaled barely a week ago. Kevin Hassett, a leading candidate to take over as Fed chair, said it would be irresponsible to lay out a plan for rates over the next six months. Higher rates are typically negative for precious metals, which don’t pay interest.

Gold has gained roughly 60% this year, boosted by elevated central-bank purchases and strong inflows to exchange-traded funds. While it’s pulled back from a peak of above $4,380 an ounce in late October, it has found support on expectations for further monetary easing in the US. Pacific Investment Management Co. expects gold to continue doing well, with central banks holding more gold than Treasuries.

Any suspicion that the Fed might pause its recent policy of cutting rates may weigh on gold, analysts from BMI, a unit of Fitch Solutions Inc., said in a note. Bullion may fall “below $4,000 an ounce as a monetary-easing cycle that began in 2024 starts to lose momentum,” they said.

Gold was up 0.3% as of 10:45 a.m. London time. Silver rose to around $58.59 an ounce, after falling in early hours. The Bloomberg Dollar Spot Index was flat. Palladium and platinum both declined.