Gold back above $4000 ahead of expected Fed interest rate cut

Gold (GC=F)

Gold prices climbed back above the $4,000 mark in early European trading on Wednesday, regaining ground as progress in US-China trade negotiations reduced demand for haven assets and bargain hunters returned ahead of an anticipated Federal Reserve interest rate cut.

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4,031.40

+48.30

+(1.21%)

As of 5:33:14 AM EDT. Market Open. Advanced Chart

Gold futures climbed 1% to $4,020.00 per ounce, while spot gold gained 3% to $4,015.05 an ounce, at the time of writing.

The precious metal, a traditional refuge in times of geopolitical and financial strain, has benefited this year from heightened global uncertainty, persistent trade tensions and a waning appetite for the US dollar. Strong central bank purchases and robust inflows into exchange-traded funds have also lent support. Expectations of lower US interest rates have further bolstered the appeal of the non-yielding asset.

Read more: FTSE 100 LIVE: Stocks mixed as traders await Fed interest rate decision and US-China trade meeting

Analysts expect gold’s rally to extend into 2026, with prices projected to hold above $4,000 per ounce on average for the first time. According to a Reuters poll, the median forecast among 39 analysts and traders points to an average of $3,400 per troy ounce in 2025, up from $3,220 in July. Prices are expected to average $4,275 in 2026 — a sharp increase from $3,400 in the previous survey.

“Gold’s performance in 2025 reflects more than the strength of a rally. It marks an acceptance of a new reality,” said David Russell at GoldCore. “The market is no longer responding to short-term shocks but to a deeper loss of confidence in policymakers, currencies, and the financial system itself.”

Oil (BZ=F, CL=F)

Oil prices fell on Wednesday morning as swelling inventories and sluggish demand growth outweighed geopolitical developments and fresh signals from OPEC+ over future production levels.

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63.86

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+(0.05%)

As of 5:33:11 AM EDT. Market Open. BZ=FCL=F

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Brent crude futures dipped 0.5% to $64.05 per barrel at the time of writing, while West Texas Intermediate futures lost 0.6% to $59.82 a barrel.

Matthew Whitaker, the US ambassador to Nato, said that president Donald Trump “will move forward with new stringent sanctions against Moscow, aimed at pressing Vladimir Putin to enter negotiations to end the war in Ukraine.”

A US industry report showed a decline of 4m barrels in nationwide oil inventories, alongside decreases in gasoline and distillate stocks. Despite the drawdown, analysts noted that overall inventories remain elevated compared with seasonal norms, underscoring persistent oversupply.

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Oil is on track for its third consecutive monthly decline, with prices under pressure from expectations of a growing global surplus as OPEC+, which includes members of the Organisation of the Petroleum Exporting Countries and allies such as Russia, continues to ease earlier production curbs.

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Four sources familiar with ongoing discussions told Reuters that OPEC+ is leaning towards another modest output increase in December. The group, which had cut production for several years to stabilise the market, began unwinding those reductions in April as supply conditions loosened.

Pound (GBPUSD=X, GBPEUR=X)

The pound extended its decline on Wednesday, slipping to its lowest level in nearly three months against the dollar as expectations of further US Federal Reserve rate cuts coincided with growing unease over potential tax rises in the UK’s upcoming autumn budget.

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1.3219

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As of 9:42:41 AM GMT. Market Open. GBPUSD=XGBPEUR=X

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The pound lost 0.5% against the greenback, trading at 1.3201. The US dollar index (DX-Y.NYB), which tracks the greenback against a basket of six major currencies, rose 0.3% to 98.98.

Investors are closely watching the Federal Reserve’s policy announcement for signals as to the future path of interest rates, with markets largely convinced that the US central bank will move to reduce borrowing costs for the second consecutive meeting.

According to the CME FedWatch tool, traders have fully priced in a 25-basis-point cut that would bring the federal funds rate down to a range of 3.75% to 4%. The same data suggest investors expect another reduction at the Fed’s December meeting.

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The pound’s decline also reflects renewed domestic pressure, with markets focused on the fiscal stance of the UK government ahead of November’s budget. Analysts warn that speculation over higher taxes could dampen investor sentiment at a time when the UK economy remains fragile.

In other currency news, the pound edged lower against the euro, down 0.3% to trade at €1.1355.

In equities, the FTSE 100 (^FTSE) was up 0.4% on Wednesday morning, trading at 9,735 points. For more details on market movements, check our live coverage here.

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