The International Gold Market in 2025

In 2025, the Federal Reserve shifted toward a monetary easing cycle amid deteriorating labor market conditions and slowing economic activity, even as inflation remained above its 2% target. Despite occasional quarterly spikes (e.g., +4.3% in Q3), full-year growth was expected to come in well below 2024's pace — roughly 1.5–2.0%, against 2.8% growth the year prior.

As of September, annual CPI growth stood at around 3.0%, above both the Fed's target and September 2024's reading of 2.4%. Core PCE ran at 2.8–2.9% year-over-year, versus roughly 2.7% a year earlier — signaling persistent inflationary pressure that limited room for more aggressive easing.

The key driver of the policy shift was a weakening labor market. U.S. unemployment rose to roughly 4.4% in September, up from about 4.1% a year earlier — one of the highest readings since 2021. That rise came alongside modest job growth (~119,000 new jobs), pointing to a cooling labor market and raising concerns about broader economic softening under high real interest rates. New York Fed President John Williams stressed in his remarks that further Fed decisions needed to weigh the "balance of risks" between inflation and employment — signaling no need for hasty moves, while acknowledging that labor-market weakness called for a more flexible approach to rates.

Treasury yields remained an additional source of volatility for gold prices. Despite expectations of Fed easing, 10-year Treasury yields repeatedly approached levels above 4%, holding near three-month highs of roughly 4.16–4.20% — a headwind for gold, since higher nominal and real rates raise the opportunity cost of holding a non-yielding asset.

Against this backdrop, the Fed began easing in the second half of the year. After an extended period holding rates at restrictive levels, the federal funds target range was cut to 3.50–3.75% by September–December — a cumulative reduction of about 75 basis points from the end-2024 level of 4.25–4.50%. Fed Chair Jerome Powell noted publicly that the central bank had "already cut rates by roughly 75 bps since September" and that policy had moved close to neutral-rate estimates, while stressing that the path ahead would depend on incoming inflation and labor data. Governor Christopher Waller, however, noted the Fed remained roughly 50–100 bps above the neutral rate. Other Board members took a more cautious tone — Governor Lisa Cook signaled that further easing, including a possible December cut, was not a foregone conclusion and should rest on an objective assessment of inflation and employment risks rather than automatically following market expectations, emphasizing a patient approach amid considerable economic uncertainty.