Gold Climbs as CPI Cools, Boosting Case for 2026 Fed Rate Cuts

[Ben Graham]

Gold climbed toward its record high in late December, following news the Consumer Price Index slowed in November. Investors bought gold and silver after the CPI report as cooling inflation gives the Federal Reserve room to cut interest rates more aggressively in 2026 to help the faltering labor market.

Non-yielding assets like gold and silver perform well in low-interest rate environments and this latest report helps sets precious metals up for a strong start to the New Year.

The CPI averaged a 0.1% increase in October and November, according to the Bureau of Labor Statistics. The November annual CPI rate dropped to 2.7% from 3% in September. Economists were expecting a 0.3% increase in CPI inflation and a 3.1% annual reading. Because of the lengthy government shutdown this fall, the October and November CPI reports were combined.

Digging into the CPI report, several categories revealed outright deflation. For example, consumer prices in the lodging away from home, recreation, and apparel categories fell from September to November. This helps set the stage for inflation to ease further in 2026.

For investors, this is a strong signal the Fed will continue to favor boosting the jobs market with lower interest rates in 2026. The tamer CPI reading boosted odds for a Fed interest rate cut at its January meeting.

Big Picture for Precious Metals

Gold and silver are wrapping up an extraordinary year with outsized returns for precious metals investors. Gold climbed over 60% and silver is up 117% this year. Some investors may wonder “is it time to take profits” or “is the top in?” Not even close.

Looking at bull markets in gold going back to the 1970’s, the precious metal only stopped going up when the underlying drivers in the macro environment changed. We haven’t seen that. The drivers pushing precious metals are still firmly in place including a weakening U.S. dollar, strong central bank buying, geopolitical unrest around the globe, economic uncertainty and worries about the growing U.S. national debt.

On the economic front, there is growing evidence of weakness in the U.S. labor market—with over 1.1 million job layoffs announced in the first 11 months of the year. This will force the Fed to throttle back on interest rates in 2026.

A slowing economy and lower interest rates are two key ingredients that will keep the tailwinds blowing strong in the precious metals historic rally into the New Year.

Bank of America forecasts that gold will hit $5,000 an ounce in 2026. J.P. Morgan highlights a scenario that could push gold to $6,000 an ounce. Silver is in the midst of a historic uptrend with Saxo Bank calling for gains toward $70 in 2026, Citigroup sees potential for silver to climb to $72 next year.

How can you take advantage of this inflation news? Precious metals investors can lean into the strong uptrends and use this time to increase your allocations to physical precious metals before the end of the year and before the Fed cuts rates again.

Get ahead of the curve before gold and silver make their next leap higher. Get started by increasing your allocation to precious metals today. And, you can protect and grow your wealth for tomorrow.

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