First, the price of gold slightly declined on Wednesday. This is while investors await a U.S. interest rate cut and signals regarding future monetary policy. In contrast, silver continued its rise to new record levels.
Secondly, spot gold fell by 0.4% to $4193.60 an ounce. Additionally, U.S. futures for February dropped by 0.3% to $4221.60.
On the other hand, spot silver rose by 0.7% to $61.11. It had reached an all-time high of $61.61 during the session. This is due to strong industrial demand, declining inventories, and its classification as a critical metal in the U.S. Notably, silver has surged 112% since the beginning of the year.
Analyst Carsten Minke from Julius Baer explained that silver breaking above the $60 level attracted new speculators to the market. He noted that this reflects an actual shortage of physical silver supply.
Additionally, the Fed concludes its meeting today. A quarter-point cut is expected to be announced at 19:00 GMT. Moreover, Fed Chair Jerome Powell will hold his press conference at 19:30. Pricing tools indicate an 88% probability of this cut.
Analyst Nitesh Shah said that gold is moving within a narrow range while waiting for the Fed's decisions. He added that what will really move gold is future policy guidance, not the cut itself. He pointed out that rising bond yields are putting pressure on gold prices.
Meanwhile, U.S. 10-year Treasury yields rose to their highest level in over three months.
Minke confirmed that investment demand for gold has been weaker compared to silver in recent weeks. He indicated that this is one of the main reasons behind the slow rise of gold.
On the other hand, Carolan de Palmos from ActivTrades said that gold's performance remains a key driver of silver prices. She warned that any correction in gold could cause greater volatility in silver.
Simultaneously, Kevin Hassett, White House advisor and the leading candidate for the Fed chair, stated that there is 'ample room' for further interest rate cuts. However, he confirmed that rising inflation could change this direction.
Overall, low interest rates support non-yielding assets like gold.
Finally, RBC raised its long-term gold forecasts. It predicted an average price of $4600 in 2026. It also expects it to reach $5100 in 2027, driven by geopolitical risks, easing policies, and financial deficits.