Gold and Silver Prices Surge Amid Expectations of U.S. Interest Rate Cuts
Precious metal markets experienced a notable uptick at the close on Friday, fueled by growing expectations that the U.S. Federal Reserve will reduce interest rates next month. This shift has heightened demand for non-yielding safe-haven assets such as gold.
Gold saw a significant rise in spot trading, climbing 1.76% to reach $4,230.37 per ounce, marking its highest level since November 13. It is projected that gold will close the week with a 3.6% gain and a 5.2% increase for the month, marking the fourth consecutive monthly rise.
In this context, silver also reached a new high of $56.78 per ounce, recording a 6.1% increase during the session and a remarkable 16.6% rise for the month.
This upward movement occurred as trading resumed for futures contracts on the CME group around 8:30 a.m. Eastern Time, following a technical interruption that lasted several hours. U.S. gold futures for February settled with a 1.3% increase at $4,254.90 per ounce.
Experts, including Bart Melek, Global Head of Commodity Strategy at TD Securities, noted, "Economic slowdown is expected to persist until 2026, and it is highly likely that the Federal Reserve will cut interest rates, attracting some investors back to gold."
Jim Wyckoff, Senior Analyst at Kitco Metals, also highlighted improved market sentiment, stating, "Technical indicators for silver have turned more optimistic over the past week, leading speculators to buy gold."
Recent cautious remarks from Federal Reserve Chair Christopher Waller and New York Fed President John Williams, along with weak economic data following the recent U.S. government shutdown, have bolstered expectations for an interest rate cut by the central bank next month. Trader expectations for a rate cut in December have risen to 87%, up from just 50% the previous week.
Conversely, gold demand in major Asian markets has decreased this week, as high prices have limited retail purchases despite the onset of the wedding season in India. In China, the removal of the tax exemption on gold purchases has further dampened consumer appetite.
