Gold Rallies as Silver Hits Record Highs Amid US Rate Cut Expectations
Gold prices regained strength on Wednesday, supported by growing market expectations of an upcoming interest rate cut by the US Federal Reserve, while silver surged to record highs due to strong supply factors.
In today’s trading, spot gold rose by 0.1% to $4,212.50 per ounce, attempting to recover from a decline of more than 1% in the previous session. US gold futures for December delivery climbed 0.7% to $4,250.80 per ounce.
This performance reflects market sentiment as investors await a series of economic data from the US set to be released this week, which are expected to influence future monetary policy. Key reports include the ADP employment report for November and the personal consumption expenditures index for September—the Federal Reserve’s preferred measure of inflation—scheduled for release on Friday.
Speculation regarding the timing of a rate cut has intensified following recent economic data indicating modest growth, reinforcing expectations of action by the Fed during its meeting on December 9-10. The CME's "FedWatch" tool currently indicates an 89% probability of a rate cut next week, up from 85% a week ago.
Analysts confirm that a low interest rate environment traditionally incentivizes gold investment, as gold does not yield interest. Brian Lan, managing director of Gold Silver Central, remarked, "The profit-taking that gold recently experienced, along with a shift towards cryptocurrencies or stocks, is normal, and we anticipate a strong rebound, especially with increasing chances of a rate cut by year-end."
In a related development, silver continued its upward trend, with prices rising 0.4% to $58.73 per ounce after reaching a new record of $58.94 during the session. Analysts attribute this surge to supportive fundamental factors.
Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai, stated, "Silver is rising due to an actual supply shortage, as we are observing a decline in inventories at Comex and in China. Therefore, we believe the fundamentals for silver look extremely strong."
Additionally, recent data from the World Gold Council indicates that central banks continue to support the market, having purchased 53 tons of gold in October, marking a monthly increase of 36%, the largest net monthly demand since early 2025.
In a parallel political development, US President Donald Trump announced on Tuesday that he plans to reveal his choice for the successor to Jerome Powell as chair of the Federal Reserve early next year, adding another layer of anticipation regarding monetary policy direction in the world’s largest economy.
