Gold Nears Record Peak as Central Bank Demand Provides Foundation

As financial markets await the final major monetary policy signal of 2025, the precious metal holds steady. While short-term tension exists ahead of the U.S. interest rate decision, a powerful force in the background is providing fundamental support: the Chinese central bank continues its substantial accumulation of reserves, bolstering the price.

Investor attention is now squarely on the commencement of the Federal Reserve's FOMC meeting. Analysts anticipate what is being termed a "hawkish cut." The central bank is expected to lower its benchmark rate by 25 basis points while simultaneously using restrictive commentary to temper expectations for further rapid moves in January. Trading at 4,234.10 US dollars, a gain of 0.28 percent, gold demonstrates notable resilience in the lead-up, showing little concern over the prevailing uncertainty.

The sustained demand from official institutions remains a core driver of this strength. In November, the People's Bank of China (PBoC) added another 30,000 ounces to its holdings, extending its uninterrupted buying streak to over a full year. This strategic move to diversify currency reserves—often a response to geopolitical risks—is finding imitators worldwide. Nations including Poland, Brazil, and Kazakhstan continue to act as significant buyers, tightening supply and providing structural price support.

Should investors sell immediately? Or is it worth buying Gold?

A Historically Strong Year

The broader 2025 rally continues to stand out as historically exceptional. Fueled by central bank demand and geopolitical strains, the precious metal is posting its best annual performance since 1979. The current price sits a mere 0.72 percent below the recent 52-week high of 4,265.00 US dollars. Positive sentiment within the sector is mirrored by silver, which is also trading near its own historic peaks.

Key Data Points:
* Rate Expectations: Markets are pricing in an interest rate cut with approximately an 89 percent probability.
* Major Buyer: China has increased its gold reserves for the 13th consecutive month.
* Technical Position: The price is trading less than one percent below its 52-week high.

The decision on Wednesday evening will clarify whether the path to new record levels is clear. Should Fed Chair Jerome Powell confirm the policy shift while striking a moderate tone, the final technical breakout for the non-yielding asset may be just a matter of time.