Gold and Silver Prices Higher on Rate Cut Bets, Government Shutdown

 

Gold and Silver Prices Higher on Rate Cut Bets, Government Shutdown

(Bullion News Network) – Gold and silver prices gained on Monday after both markets pulled back to end last week. The spot price of gold moved over $110 higher per troy ounce, erasing last Friday’s losses and setting a fresh all-time high for the precious metal. The price of silver gained to a lesser extent on Monday, adding over $0.60 per troy ounce after pulling back from an all-time high by more than $2/ozt Friday afternoon. The price action favored gold, driving the gold-silver ratio to a 13-day high of more than 83:1. Platinum and palladium prices also rebounded on Monday, with the two platinum group metals gaining approximately $39/ozt and $46/ozt, respectively. Today’s price action narrowed the gap between platinum and palladium to around $120 per troy ounce.

Rate cut speculation returned as a major price driver in the precious metals market on Monday. After executing its first rate cut of 2025 in September, the Federal Reserve is widely expected to cut rates by another 25 basis points when it meets at the end of October. CME FedWatch projects a 98.9% probability that the FOMC will vote to cut interest rates by 25 bps this month. This is up from 91.9% shortly after the September rate cut decision last month. Safe haven assets like gold and silver tend to appreciate during periods of falling rates, since cutting interest rates is typically an inflationary economic action.

Complicating the situation for rate cut futures is the lack of last month’s economic data. The U.S. government shutdown prevented the release of several key reports, including the U.S. employment report for the month of September and a fresh September Consumer Price Index (CPI) report. The CPI is scheduled for release on October 24th in order to give the Social Security Administration enough data to make its annual Cost of Living Adjustment. Nonprofits and other institutions have released estimates for these reports, but the lack of substantive data from the federal government may have an impact on investor perception of where interest rates may be heading. A cooling job market drove the Fed to cut rates in September, so new data on both employment and inflation could be essential as the FOMC considers what to do at its October meeting.

Also moving metal prices on Monday was the ongoing U.S. government shutdown. It became the longest continuous full shutdown in United States history on Monday, and the turmoil was an ongoing demand driver for precious metals as investors turned to safe haven assets in an attempt to sidestep the political turmoil. Silver prices have increased by more than 12.8% since before the government shutdown. The spot price has gained more than 12.97% while U.S. senators attempted and failed to secure the 60 votes required to pass a spending bill and end the shutdown. The same story played out on Monday, with the Senate failing to meet the vote requirement and pass the spending bill.

Geopolitical fears may also have played a role in gold’s Monday gains. The U.S. conducted its sixth strike on a boat carrying what the White House claims were “narco-terrorists” last Thursday as part of an increasingly controversial operation under Department of War head Pete Hegseth. Venezuelan President Nicolas Maduro ordered widescale military exercises last week in response to the latest strikes, prompting concerns that the strikes may ignite a larger conflict between the U.S. and Venezuela. Gold tends to thrive in periods of international conflict as a safe haven asset, and Venezuela’s oil production could put more pressure on the oil futures market, should this conflict become a full-blown war.

Gold, silver, platinum, and palladium all gained to begin the week. The gold-silver ratio jumped by more than one point to log its highest level since October 7th. The U.S. government shutdown continued with few signs of resolution in sight.