Gold gains after Fed rate cut, silver hits all-time peak
Gold prices climbed on Wednesday (December 10), recovering from earlier losses after the US Federal Reserve cut interest rates, even as investors remained unsure about the path of monetary policy next year. Silver, meanwhile, surged to a fresh record high.
- Gold prices rose, with spot gold up 0.7%, after the Federal Reserve announced another interest rate cut.
- The rate cut boosted gold's appeal, as lower interest rates typically make non-yielding assets like bullion more attractive.
- Spot silver jumped to an all-time high of $61.85 per ounce.
- Silver's record price was driven by factors including robust industrial demand, shrinking inventories, and speculative investment.
Spot gold was up 0.7% at $4,236.57 per ounce at 3.17pm ET (2017 GMT), while US February gold futures ended the session 0.3% lower at $4,224.70.
The Fed delivered another rate cut in a closely split decision, but indicated it is likely to halt further easing for now as policymakers wait for clearer signals on inflation and the labour market.
“Gold traders are pleased with the outcome, it’s back at the session highs after shaking off some profit-taking,” said independent metals trader Tai Wong.
Lower interest rates generally enhance the appeal of non-yielding assets such as bullion.
Most Fed officials still expect to trim short-term rates further next year, but opinions differ sharply on the scale of cuts.
Some policymakers see no need for additional reductions, while three even projected another rate increase.
Fed chair Jerome Powell said current policy leaves the central bank well placed to respond to future economic developments, but declined to spell out whether another cut is likely soon.
“Powell has effectively tiptoed through a divided committee to secure another cut, with only three dissenting votes, and major markets are rallying during his press conference.
It is still uncertain whether gold can push to fresh highs,” Wong added.
Spot silver jumped to an all-time high of $61.85 per ounce and is now up 113% since the start of the year, boosted by robust industrial demand, shrinking inventories and its classification as a critical mineral in the United States.
“In our view, silver’s outperformance reflects speculative capital rotating into a more leveraged play after gold’s recent pullback,” analysts at SP Angel said in a note, adding that silver is also being supported by a “tight physical market” following an October supply squeeze.
Platinum fell 2.4% to $1,654.55 per ounce, while palladium declined 2% to $1,475.94.
Reuters
