Gold Gains Strength as Silver Hits Record Highs Amid U.S. Rate Cut Expectations
Gold prices regained momentum on Wednesday, supported by growing market expectations regarding an imminent interest rate cut by the U.S. Federal Reserve, while silver surged to record levels due to strong supply dynamics.
During today's trading, spot gold prices increased by 0.1%, reaching $4,212.50 per ounce, in an effort to recover after a decline of over 1% in the previous session. Meanwhile, U.S. gold futures for December delivery rose by 0.7% to $4,250.80 per ounce.
This performance reflects market expectations as investors focus on a series of U.S. economic data set to be released this week, which are anticipated to shape the future of monetary policy. Key reports include the November ADP private sector employment report and the September Personal Consumption Expenditures (PCE) index, the Fed'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 a slight slowdown in growth, reinforcing expectations of a potential move by the Fed during its December 9-10 meeting. The CME's "FedWatch" tool currently indicates an 89% probability of a rate cut next week, up from 85% the previous week.
Analysts note that a low interest rate environment typically supports gold's performance, as it is a non-yielding asset. In this context, Brian Lan, managing director of Gold Silver Central, commented: "The recent profit-taking in gold, along with a shift towards cryptocurrencies or stocks, is natural, and we expect to see a strong comeback, especially with the increasing likelihood of rate cuts as the year comes to a close."
In a parallel development, silver continued to shine, rising 0.4% to $58.73 per ounce after reaching a new record high of $58.94 during the session. Analysts attribute this significant increase to supportive fundamental factors.
Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai, explained: "Silver is rising due to real supply shortages, as we are seeing a decline in inventories on the Comex and in China. Therefore, we believe the fundamentals for silver appear very solid."
Additionally, recent data from the World Gold Council indicated that central banks continued to support the market, purchasing 53 tons of gold in October, a 36% month-over-month increase, marking the highest net monthly demand since early 2025.
In a related political development, U.S. President Donald Trump announced on Tuesday that he plans to announce his candidacy to succeed Jerome Powell as chair of the Federal Reserve early next year, adding another layer of anticipation regarding the direction of monetary policy in the world's largest economy.
