U.S. Interest Rate Cut Predictions Boost Gold and Silver Prices
The precious metals markets experienced a significant rise at Friday's close, bolstered by growing expectations of interest rate cuts by the U.S. Federal Reserve next month. This shift has increased demand for non-yielding safe-haven assets like gold.
Gold saw a notable increase in spot transactions, rising 1.76% to $4,230.37 per ounce, reaching its highest level since November 13. The metal is set to close the week with gains of 3.6% and a monthly increase of 5.2%, marking the fourth consecutive month of growth.
In a similar trend, silver reached a new record high of $56.78 per ounce, climbing 6.1% during the session, and showing a significant monthly increase of 16.6%.
This upward movement coincided with the resumption of futures trading on the CME group around 8:30 AM Eastern Time, following a technical interruption. In this context, February delivery gold futures stabilized with a 1.3% increase to $4,254.90 per ounce.
Experts, including Bart Melek, global head of commodity strategy at TD Securities, indicated, "We expect the economic slowdown to continue until 2026, and it is highly likely that the Federal Reserve will lower interest rates, which will attract some investors back to gold."
Jim Wyckoff, senior analyst at Kitco Metals, also noted a shift in market sentiment, stating, "Technical indicators for silver have become more optimistic over the past week, prompting speculators to buy gold."
Recent cautious remarks from Federal Reserve Governor Christopher Waller and New York Fed President John Williams, along with weak economic data following the recent U.S. government shutdown, have reinforced expectations for a rate cut by the central bank next month. Trader expectations for a rate cut in December have risen to 87%, up from just 50% last week.
Conversely, gold demand in major Asian markets has declined this week, as high prices limit retail purchases despite the onset of the wedding season in India. In China, the cancellation of tax exemptions on gold purchases has dampened consumer appetite.
