Gold futures (GC=F) settled near $4,240 an ounce on Friday, closing a fourth straight month of gains and bringing the yellow metal back within shouting distance of its record high on expectations of a December rate cut.
Dovish commentary from Federal Reserve officials raised the odds that policymakers will decide to cut interest rates by at least 25 basis points next month. Since gold does not produce income, its relative attractiveness improves when interest rates fall.
Gold hit a record high of $4,336 an ounce on October 20 before falling about 10% during the first week of November. This year, the price of gold has increased more than 60%.
The decline in the US dollar (DX-Y. NYB) and expectations of continued fiscal spending and “run-it-hot” government policies towards 2026 are also expected to support bullion prices.
“We have a tremendous deficit … we also have a tremendous amount of government spending, and in addition, we have a tremendous amount of purchases by the central bank,” said Michele Schneider, chief strategist Marketgauge.com, Yahoo Finance on Friday morning.
Regarding Thanksgiving, President Trump said that he aims to end the income tax, and mentioned the expected revenue from his tariff policy.
“Over the next few years, I think we’re going to substantially reduce, and maybe completely cut … the income tax,” Trump said. “We might be almost cutting it completely because the money we’re getting is going to be so big.”
Trump’s comments come after he floated the idea earlier this month of a “dividend of at least $2,000” for those who don’t earn high incomes.
“All this [talk from Trump] it’s very inflationary, and that’s what gold is really responding to. I think $4,700 would be a good next target,” Schneider said, referring to its 2026 price forecast.
After the biggest one-day selloff in more than a decade, Wall Street analysts remained bullish on the price of gold. The precious metal is on track for its best year since 1979, driven by central bank purchases and increased inflows into exchange-traded funds (ETFs).
“We still expect continued central bank purchases, combined with private investor flows under Fed easing, to lift gold prices to $4,900 by the end of 2026, with significant upside if the private investor diversification theme were to gain more traction,” Goldman Sachs analysts wrote earlier this month.
Meanwhile, UBS recently raised its price target on the precious metal to $4,500 per ounce by mid-2026.
“Our view on gold remains bullish,” UBS analysts wrote earlier this week. “We think the role of gold as a portfolio diversifier and geopolitical hedge is not diminished.”