Gold prices have fallen from a post FOMC high of $4250/oz to lows around $4206/oz in early US trade. Market participants are assessing the Federal Reserve’s (Fed) monetary policy outlook after the latest interest rate cut.
Mixed FOMC Keeps Markets Guessing
On Wednesday, the Federal Reserve (Fed) carried out another interest rate cut of 25 bps, which put the new target range for the policy rate at 3.50%-3.75%, exactly as expected.
The decision, however, was not unanimous, passing with a 9-3 vote; one member wanted a larger cut of 50 bps, while two others wanted to keep the rates unchanged. Despite the cut, the price of gold did not rise much because the Fed did not offer a strong or clear outlook for future rate decisions.
As discussed in the FOMC Preview article this week, the dot plot and forward guidance were always likely to hold more importance at the meeting. This certainly proved true looking at the reaction of the precious metal since.
Fed Chair Jerome Powell repeated that the central bank is “well-positioned to wait and see how the economy evolves.” These comments confirmed that the Fed is taking a “wait-and-see” approach after cutting rates three times this year (a total of 75 basis points).
Nevertheless, since policymakers still disagree on whether more rate cuts will be needed in 2026, market participants are unsure about the future direction of policy, which is keeping the price of gold stuck in the same trading range it has been in for over a week.
Market expectations however, have not changed much. Looking at the latest data from LSEG and markets are still pricing in around 57 bps of rate cuts through December 2026.
Implied Rates for Federal Reserve
Source: LSEG
Ahead of the meeting markets were pricing in around 76 bps of cuts (including yesterday). This shows that there hasn’t been much change and this could explain Gold’s malaise today.
FOMC Impact on the US Dollar and Outlook
The FOMC meeting yesterday was likely the most significant event that could positively impact the markets before the end of the year.
Since that event has now passed, the US dollar might start to experience its typical seasonal weakness as the year concludes. This could cause the US Dollar Index (DXY) to gradually fall toward the 98.00 level and potentially lower.
Looking ahead at events that could spark some volatility in the US Dollar in the days and weeks before the January Fed meeting.
There is a large amount of new economic data scheduled for release. However, Fed Chair Powell cautioned that this data might be misleading or inaccurate because of technical problems caused by the government shutdown.
Market participants are now turning their attention to the upcoming November jobs report, which is due next Tuesday. Additionally, there are several other rate meetings scheduled by major central banks over the next ten days.
For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)
Geopolitical Risk
Another factor to keep in mind heading into the year-end is the ongoing US-Venezuela dynamic. Any escalations or fall of government could add to safe haven demand and thus aid Gold in its bullish rally.
This may prove to be a saving grace for those eyeing $4300/oz handle for the precious metal. Without such a catalyst, i am not sure Gold can sustain its current bullish momentum in the last three weeks of December. This could leave the precious metal in for a correction ahead of 2026.
Technical Outlook – Gold (XAU/USD)
Looking at the four-hour chart below, the technical picture is decent for bullish continuation.
The key is the most recent high near the key 4250 handle which has served as resistance before as well on December 5.
A four-hour candle close above this level will be needed if bulls are to seize the initiative.
The period-14 RSI remains above 50 which is a sign of bullish momentum.
A move above 4250 brings 4259 and 4275 into focus.
A pullback from here brings the 50-day MA into focus at 4209 before the 4190 and 100-day MA at 4166 into focus.
Gold (XAU/USD) Four-Hour Chart, December 11, 2025
Source: TradingView (click to enlarge)
 monetary policy outlook after the latest interest rate cut.){kind=link}