Gold Price Forecast: XAU/USD climbs to near $4,350 on Fed rate cut bets, geopolitical risks

• Gold price climbs to around $4,345 in Friday’s early Asian session. 

• Expectations of Fed rate cuts this year and geopolitical risks could boost the Gold price. 

• Increased margin requirements on gold and silver futures by the CME Group might cap the upside for precious metals. 

Gold price (XAU/USD) rises to near $4,345 during the early Asian session on Friday. Gold finished 2025 with a significant rally, achieving an annual gain of around 65%, its biggest annual gain since 1979. The rally of the precious metal is bolstered by the prospect of further US interest rate cuts in 2026 and safe-haven flows. 

The US Federal Reserve (Fed) decided to cut the interest rate by 25 basis points (bps) at its December policy meeting, bringing the federal funds rate to a target range of 3.50%–3.75%. Those in favor cited increased downside risks to employment and easing inflation pressures.  Fed Governor Stephen Miran voted against the action in favor of a jumbo rate cut, while Chicago Fed President Austan Goolsbee and Kansas City’s Jeff Schmid dissented in favor of leaving rates unchanged.

The minutes from the Federal Open Market Committee (FOMC) meeting on December 9-10 indicated that most Fed officials viewed further interest-rate reductions as appropriate, provided inflation declines over time, although they remained divided over when and by how much to cut. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.

Additionally, the persistent Israel-Iran conflict and the ongoing US-Venezuela tensions could boost the Gold price. It’s worth noting that traders seek assets that can preserve value during periods of uncertainty, which supports a traditional safe-haven asset such as Gold.

On the other hand, traders could book their profits or rebalance their portfolio, which might cap the upside for the yellow metal. The Chicago Mercantile Exchange (CME) Group, one of the world’s largest trading floors for commodities, raised margin requirements for gold, silver, and other metals. These notices require traders to put up more cash on their bets in order to insure against the possibility that the trader will default when they take delivery of the contract.