Gold Extends Gains for the Third Consecutive Day

SadaNews - Gold extended its gains, rising for the third consecutive day, after the U.S. Federal Reserve executed its third successive and expected interest rate cut on Wednesday. The price of silver also reached a record high.

The precious metal rose by up to 0.5%, nearing $4,214 per ounce, amid falling Treasury yields and the dollar following the Fed's last meeting of the year.

The U.S. central bank cut interest rates for the third time, while maintaining its forecast for only one more reduction in 2026. However, it slightly altered its statement to hint at increased uncertainty regarding future cuts.

The Fed's dovish stance is generally positive for precious metals, which typically benefit from low-interest rates since they do not pay interest.

The Federal Open Market Committee voted 9 to 3 against the opposition to reduce the benchmark interest rate by a quarter point to a range between 3.5% and 3.75%. The Fed's dovish leaning is favorable for precious metals, which usually thrive in a low-interest-rate environment.

Sharof Shanana, chief investment strategist at Saxo Markets in Singapore, said: "It's a feeling of relief, not exuberance." She added: "The 25 basis point cut and the decline in yields were largely priced in, and the split in the vote prevents traders from pushing prices higher during the day."

Gold has risen more than 60% this year, and silver has more than doubled, both metals on track for their best annual performance since 1979.

Central Bank Purchases Support Prices

The rise was supported by high central bank purchases and investors abandoning sovereign bonds and currencies. Holdings of gold-backed exchange-traded funds have increased every month this year except for May, according to the World Gold Council.

Shanana noted that "the expansion of fiscal deficits, the persistence of geopolitical risks, the ongoing trend of de-dollarization, and central bank purchases all indicate that the gold bull market has room to grow."

The central bank also announced it would begin purchasing $40 billion in Treasury bonds monthly starting Friday, in an effort to rebuild reserves in the financial system.

These measures will enhance overall liquidity in the market and support gold prices. Reinforcing expectations that the next Federal Reserve chair will be more dovish, President Donald Trump reiterated his view that interest rates should be much lower, as the candidate selection process nears its end.

Gold rose by 0.2% to $4,238.23 per ounce by 9:50 AM in Singapore. Silver increased by up to 1.5% to a record level of $62.7249. Both platinum and palladium saw price increases. The Bloomberg Dollar Index fell by 0.1%.