Gold prices edged higher today on expectations of a Christmas rate cut and another forecast that it would be heading towards $5,000 an ounce in 2026.
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Retail Woes Could Cut Rates
Spot gold advanced 0.8% to $4,162.05 an ounce in early trading but pared back a little as the day progressed.
Gold investors were buoyed by data earlier this week that U.S. retail sales had slowed down in September – the first time markets had been given a glimpse of the state of consumer confidence for two months after the government shutdown delayed new updates.
Headline retail sales grew by 0.2% in September, which was below expectations of a 0.4% month-on-month increase.
Separate data from The Conference Board showed that U.S. consumer confidence dropped to 88.7 in November, down from 95.5 in October.
In addition, a preliminary estimate from ADP Research showed that US private employers shed an average 13,500 jobs per week, in the four weeks to 8 November.
Mixed together, the data showed the fragility of the U.S. economy raising expectations that the Fed would cut rates in December. Gold tends to do well in times of lower interest rates.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “The interest-rate yo-yo is back in full swing, with markets now pricing in close to an 80% chance of a December cut.”
Price Will Keep Rising
Also supporting the gold price today were increased doubts over whether the Russia-Ukraine peace plan will be accepted by President Putin.
Again, gold likes economic and geopolitical uncertainty as it makes investors seek it out as a safe haven for their portfolios. This fear has been a huge driver, alongside central bank buying, for the surge in the precious metal price this year.
It is expected to keep firing higher next year.
In a note today Deutsche Bank (DB) research analyst Michael Hsueh said that the bank was upgrading its forecast for gold prices in 2026.
He said Deutsche Bank expected gold prices to average towards $4,450 per ounce in 2026, up from a previous forecast of $4,000. The bank expected gold prices to have a yearly range of $3,950 to $4,950 an ounce in 2026.
This follows a note from Bank of America (BAC) earlier this week stating that bullion could climb to $5,000 an ounce in 2026. The bank cautions, however, that a materially more hawkish Federal Reserve remains the principal risk to its bullish outlook.
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