Geopolitics and Fed Moves Fuel Gold Price Swings

Gold prices are currently at $2,647 an ounce today, up slightly from $2,627 at the beginning of last week.

Last week's escalating geopolitical tensions briefly sent gold prices over $2,700 an ounce before the weekend. To recap, Biden authorized long-range US missiles to be used by Ukraine to target Russian territory for the first time since the escalation began. Moscow says six US-made ATACMS missiles were launched at Russia on Tuesday, while British Storm Shadow cruise missiles and US-made HIMARS were fired into Russia Thursday. 

According to some economists, any weakness in consumer confidence or a disappointing revision to third-quarter GDP could strengthen expectations for a rate cut. At the same time, weak inflation data in the core Personal Consumption Expenditures (PCE) Index could further support the Federal Reserve's easing cycle, pushing gold prices higher.

According to CME Group, a 3rd consecutive interest rate decrease (25 basis points) has a current probability of 56.2% for the December 18th Federal Reserve meeting.

Goldman Sachs, a leading financial institution, reiterated its outlook for gold to hit $3,000 by the end of 2025. This prediction is significant as it suggests a potential upward trend in gold prices over the next few years. Many investors are buying the recent dip from all-time high gold prices leading up to the US presidential election. Gold remains attractive as the Federal Reserve continues to lower interest rates and economic uncertainty remains high.