Gold Gains Strength as Silver Reaches New Highs Amid U.S. Interest Rate Cut Expectations

Gold prices rebounded on Wednesday, supported by increasing expectations that the U.S. Federal Reserve may soon begin a cycle of interest rate cuts, while silver reached new record highs driven by strong supply factors.

During today’s trading, spot gold rose by 0.1% to $4,212.50 per ounce, attempting to recover after a decline of over 1% in the previous session. U.S. gold futures for December also increased 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 expected to shape future monetary policy. Key reports include the November private sector employment report (ADP) and the September personal consumption expenditures index, the Fed's preferred measure of inflation, scheduled for release on Friday.

Speculation regarding the timing of interest rate cuts has intensified following recent economic data indicating a slight slowdown in growth, reinforcing expectations for action from the Fed at its upcoming 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 note that a low interest rate environment typically boosts gold performance, as it is a non-yielding asset. Brian Lan, managing director of Gold Silver Central, stated: "The recent profit-taking in gold, along with shifts toward cryptocurrencies or stocks, are natural phenomena, and we expect a strong rebound, especially with rising chances of rate cuts as year-end approaches."

In a similar context, silver continued to shine, with prices rising by 0.4% to $58.73 per ounce, after reaching a new record of $58.94 during the session. Analysts attribute this strong increase to favorable fundamental factors.

Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai, explained: "Silver is rising due to a real supply shortage, as we are seeing declining stocks on the Comex exchange and in China. Therefore, we believe the fundamentals for silver appear extremely strong."

Additionally, recent data from the World Gold Council indicates that central banks' strategic activities continue to support the market, with purchases of 53 tons of gold in October, marking a 36% month-over-month increase, the largest net monthly demand since early 2025.

In a parallel political development, U.S. President Donald Trump announced on Tuesday his intention to announce his choice for a successor to Jerome Powell as head of the Federal Reserve early next year, adding another layer of anticipation to the monetary policy trajectory in the world's largest economy.