The precious metals market is showing mixed movements as investors brace for the highly anticipated interest rate decision and future policy guidance from the U.S. Federal Reserve.
Gold Awaits Fed Guidance, Pressured by Yields
Gold prices have softened slightly as the market enters a holding pattern ahead of the Federal Open Market Committee (FOMC) announcement.
- Price Movement: Spot gold was down 0.3% to $4,197.91 per ounce.
- Key Factor: The dip is primarily due to investors awaiting the Fed’s forward guidance—the future policy outlook—which is considered more influential than the expected interest rate cut itself.
- Headwind: Higher benchmark 10-year U.S. Treasury yields, which have reached a three-month high, are currently putting downward pressure on the non-yielding asset.
- Analyst View: Investor demand for gold in physically-backed products has been weaker compared to silver, contributing to gold’s restrained performance.
- Long-Term Outlook: Despite the short-term dip, RBC Capital Markets has raised its long-term forecasts, projecting gold to average $4,600/oz in 2026 and $5,100/oz in 2027, citing geopolitical risks and easier monetary policy.
Silver Soars Past $60 on Industrial Strength
Silver is extending its powerful rally, reaching new record highs driven by strong fundamentals.
- New High: Spot silver rose 0.6% to $61/oz, having earlier hit an all-time peak of $61.61.
- 2025 Performance: The metal has experienced a remarkable surge of 112% this year.
- Drivers of the Rally:
- Significant growth in industrial demand.
- A decline in physical inventories.
- Its official designation as a critical mineral by the U.S. government.
- The break above the $60/oz level has attracted increased interest from short-term speculators.
- Volatility Risk: Analysts caution that silver prices remain closely linked to gold; any significant correction in gold could lead to amplified volatility in silver.
The Looming Fed Decision
The outcome of the Federal Reserve’s meeting is the primary focus for the entire metals market.
- Event Schedule (GMT):
- 1900: FOMC announces its interest rate decision.
- 1930: Fed Chair Jerome Powell holds a press conference.
- Market Expectation: There is an 88% probability assigned to the Fed implementing a 25-basis-point (bps) rate reduction.
- Policy Impact: Generally, lower interest rates tend to favor non-yielding assets like gold and silver by reducing the opportunity cost of holding them.
