Gold Steady Ahead of Fed Rate Cut; Silver Soars Past $60

Post by : Saif Nasser

Gold prices were mostly unchanged on Wednesday as investors awaited a likely interest rate cut from the U.S. Federal Reserve and comments from Chair Jerome Powell on the future of monetary policy. At the same time, silver continued its strong rally, rising above $60 an ounce for the first time in history.

Spot gold fell slightly by 0.2% to $4,199.92 per ounce, while U.S. gold futures for February delivery also dropped 0.2% to $4,228.10 per ounce. In contrast, silver climbed 1.2% to $61.37 per ounce after reaching a record high of $61.61 earlier in the session.

Analysts say silver’s sharp rise is driven by a mix of strong industrial demand, tight physical supplies, and its recent designation as a critical mineral by the United States. "Silver broke above the $60 per ounce mark, luring more short-term speculators and trend followers into the market," said Carsten Menke, an analyst at Julius Baer. He added that these factors reflect the growing physical tightness in the silver market.

Silver has surged 113% this year, highlighting investor interest in the metal, while gold has been relatively stable. Menke noted that gold demand from investors, measured by holdings in physically-backed funds, has been weaker compared to silver, which partly explains the slower price growth.

Holdings of the largest gold-backed exchange-traded fund (ETF), the SPDR Gold Trust in New York, fell slightly by 0.1% on Tuesday. Meanwhile, the iShares Silver Trust saw a 0.53% increase, showing continued investor interest in silver.

The Federal Open Market Committee (FOMC) is meeting for a two-day session, with a rate-cut decision expected at 1900 GMT, followed by comments from Powell at 1930 GMT. Markets are pricing in an 88% chance of a 25-basis-point reduction in interest rates. Lower rates generally make non-yielding assets such as gold more attractive to investors.

White House economic advisor Kevin Hassett, considered a likely replacement for Powell as Fed chair, said there is “plenty of room” to cut rates further, though he cautioned that rising inflation could affect this plan.

RBC Capital Markets has raised its long-term forecasts for gold, predicting an average of $4,600 per ounce in 2026 and $5,100 per ounce in 2027. Analysts cited geopolitical risks, softer U.S. monetary policy, and persistent budget deficits as factors supporting higher gold prices.

As the Fed decision approaches, markets will closely watch both the interest rate move and Powell’s guidance, which could significantly affect the prices of gold, silver, and other precious metals.

Gold remains steady for now, while silver continues its historic rally, reflecting both market expectations and growing investor interest in safe and industrial metals.