Spot Gold extended gains to a one-week high of $4,474.26/oz. on Tuesday, as dovish remarks by Federal Reserve officials reinforced rate cut expectations.
Yesterday Minneapolis Fed President Neel Kashkari said that inflation was slowly cooling, but there was a risk the unemployment rate could “pop” higher. This would add to prospects of an interest rate cut.
“(Comments by Fed officials) certainly didn’t hurt but it doesn’t look like the calculus has changed all that much. We of course have a big week this week with the jobs report on Friday,” Ilya Spivak, head of global macro at Tastylive, was quoted as saying by Reuters.
Investor focus now sets on the US data string, including ADP employment figures, job openings as well as Friday’s Non-Farm Payrolls report for December, which may provide more clues on the health of the economy and the Fed’s monetary policy trajectory.
FOMC policy makers had signaled just one 25 bps rate cut for 2026, while investors continue to expect two or three rate cuts of 25 basis points each.
Lower interest rates tend to reduce the opportunity cost of holding Gold, which pays no interest.
On the geopolitical front, the US-led capture of Venezuelan President Nicolas Maduro has triggered a rush into safe-haven assets, supporting precious metals.
Officials said Maduro was transferred to the US to face long-standing narcotics-related charges and entered a not guilty plea in a New York court on Monday.
According to a Reuters report, US President Donald Trump is preparing to meet with leaders of major US oil companies to explore options for increasing Venezuelan oil output.
The potential for prolonged geopolitical tension and shifts in policy could boost Gold’s role as a hedge against market turbulence.
Spot Gold was last up 0.25% on the day to trade at $4,460.20 per troy ounce.
Gold had a notable rally last year due to a combination of factors such as strong central bank buying, US tariff policies, potential rate cuts by the Federal Reserve, robust ETF inflows and geopolitical uncertainty. The yellow metal registered its best annual performance since 1979 in 2025, gaining 64.7%.
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