Gold and silver prices increase weekly with a boost from US rate-cut expectations

Gold and Silver Prices Retreat from Record Highs, Anticipation of Additional Rate Cut Grows

Gold and silver prices saw a slight retreat on Friday from their record highs, but remained on track for weekly gains as anticipation of another interest rate cut by the U.S. looms. Investors are eagerly awaiting a key inflation report for further guidance on the market trends.

Spot gold held steady at $2,673.21 per ounce, just below the previous session’s record peak of $2,685.42, while U.S. gold futures remained constant at $2,695.80. Meanwhile, spot silver dipped 0.3% to $31.93 per ounce after touching a nearly 12-year high of $32.71 in the previous session.

Silver prices have been bolstered by the strong performance of bullion and stimulus measures implemented by China. However, some analysts caution that the rally may lose steam due to concerns over industrial demand.

Federal Reserve’s recent larger-than-usual half-percentage-point rate cut has sparked a surge in gold prices, leading to consecutive record highs and a 1.8% increase so far this week.

Insight: Market Impact of Stimulus Measures and Geopolitical Tensions

The current support for gold prices can be attributed to the expected U.S. Fed interest rate cuts and China’s stimulus measures, both of which are contributing to the weakening of the dollar. This weakening trend in the dollar has made greenback-priced commodities more affordable for holders of other currencies.

Traders are now speculating a 51% probability of another half-percentage-point reduction in November, as indicated by the CME FedWatch Tool. Lower interest rates diminish the opportunity cost of holding bullion, which is often regarded as a safe-haven asset during times of economic and political uncertainty.

Market attention has shifted towards the upcoming release of the core personal consumption expenditures price index data, which is the Fed’s preferred inflation measure. The geopolitical tensions, including the conflict in the Middle East and the impending U.S. presidential elections, are further influencing the market dynamics.

BMI suggested that amidst these geopolitical tensions, gold prices may see higher highs in the coming months.

In other metal markets, platinum was down by 0.6% at $1,001.54, while palladium dropped 1.1% to $1,035.75.

Overall, the fluctuations in gold and silver prices are closely tied to global economic factors, central bank policies, and geopolitical events, all of which continue to shape investor sentiment and market movements in the precious metals sector.