Gold and Silver Price Forecast: Fed Cuts Fuel $4,400 Gold, Silver Holds $71
Author: Arslan Ali
Published: December 31, 2025
Market Overview
As the European trading day commenced, gold prices (XAU/USD) surged past $4,350, marking a remarkable 65% increase year-to-date, positioning it for its best performance since 1979. This price surge is primarily driven by speculation surrounding continued interest rate cuts by the US Federal Reserve in 2026, which enhances the appeal of non-yielding assets like gold.
Fed Policy Outlook Strengthens Gold’s Appeal
The Federal Reserve recently implemented a 25 basis point rate cut, bringing rates to a range of 3.50%-3.75%. This move is seen as crucial for managing inflation and supporting employment. However, there is a division among Federal Open Market Committee (FOMC) members regarding future cuts, with some advocating for more aggressive reductions while others prefer to maintain current rates. Following the release of the Fed's meeting minutes, the likelihood of a rate cut in January has diminished to about 15%, according to the CME FedWatch tool.
Geopolitical Tensions Fuel Safe-Haven Demand
Ongoing geopolitical tensions, particularly the Israel-Iran conflict and strained US-Venezuela relations, are driving investors towards safe-haven assets like gold. However, a recent margin hike by the CME Group for gold and silver futures may limit further price increases, as traders will need to allocate additional capital. Positive developments in Ukraine peace talks could also reduce the demand for gold as a safe haven.
Short-Term Forecast
Gold is currently holding above the $4,300 support level, with potential upside towards $4,400–$4,470 if momentum continues. Conversely, a drop below $4,280 could expose the price to $4,240, especially in the context of thin holiday trading volumes.
Gold Prices Forecast: Technical Analysis
Gold is trading near $4,331, recovering from a significant pullback after reaching $4,548. This decline briefly pushed gold below the 50-day EMA, but buyers returned as it approached the $4,280-$4,300 support zone. The 200-day EMA remains on an upward trajectory, reinforcing the medium-term uptrend. Immediate resistance is noted around $4,400, with a subsequent level at $4,470. A strategy to buy gold on dips near $4,300 is suggested, targeting $4,400 with a stop loss below $4,240.
Silver (XAG/USD) Price Forecast: Technical Outlook
Silver is currently trading around $72.30, stabilizing after a sharp decline from its peak of $82.00. The price remains above a long-term trendline, indicating a bullish overall trend. Recent pullbacks found support around $70.50-$71.00, coinciding with trendline support and previous consolidation zones. The RSI has dipped into the low 40s but is showing signs of recovery, suggesting a potential continuation of the trend. A long position around $71 is recommended, with a target of $75.75 and a stop-loss set below $69.80.
Conclusion
The outlook for gold and silver remains positive, driven by Fed policy and geopolitical uncertainties. Traders are advised to monitor key support and resistance levels closely as market conditions evolve.