Gold and Silver Slide Ahead of Federal Reserve Meeting

 

Gold and Silver Slide Ahead of Federal Reserve Meeting

(Bullion News Network) – Gold and silver prices pulled back again on Monday, with both metals challenging key supports ahead of a pivotal Federal Reserve meeting. The spot price of gold retreated by over $100 per troy ounce, challenging the $4,000 support just one week after setting a fresh all-time high above $4,350/ozt. Silver prices slid by a larger percentage, dropping over $1.60/ozt in the morning trading hours and falling below $47 per troy ounce. Just two weeks ago on October 16th, silver set an all-time high, closing at $54.24 per troy ounce. A series of pullbacks drove the precious metal over $7/ozt lower. The price action favored gold, driving the gold-silver ratio to a one-month high of more than 85.30:1. 

This week, all eyes are on the Federal Reserve. The FOMC cut interest rates by 25 basis points in September, the first interest rate reduction of 2025. Federal Reserve officials are widely expected to vote for another 25 bps cut at October’s meeting, scheduled for Wednesday, October 29th. CME FedWatch projected a 97.8% probability on Monday that the Fed will vote to cut rates in October, a likelihood increase of 1.6% compared to last Friday’s reading. Gold and silver, two safe haven assets that tend to perform well in the inflationary environments often triggered by rate cuts, soared to fresh highs following the September rate cut decision. Precious metal prices stabilized at the end of last week, with gold and silver losing marginally amid a relatively calm trading week. As the Fed prepares to release its rate cut decision on Wednesday, analysts expect more volatility out of safe haven assets like gold and silver.

Platinum group metals also pulled back on Monday, with platinum and palladium losing approximately $11 and $14 per troy ounce, respectively. The platinum-palladium price disparity shrunk throughout mid-October, and platinum is slated to close Monday evening ahead of palladium by around $170 per troy ounce. 

The United States government shutdown entered day 27 on Monday, and analysts say that there’s little end in sight. To make matters even more complicated, federal food aid programs are scheduled to pause on November 1st if Congress fails to end the shutdown by passing a spending bill. Certain federal employees have been without pay for much of the shutdown, posing an acute political risk to both Republicans and Democrats as the government shutdown continues. Republicans and Democrats both blame the opposing party for causing the shutdown, which was triggered when the Senate failed to secure the 60 votes required to pass a routine appropriations bill. 

The ongoing government shutdown may introduce a bit more chaos into American markets as traders weigh their options amid a historically uncertain political and economic landscape. Gold and silver prices soared to record heights earlier this month as the shutdown dragged on, and it is unclear at this point when the Senate will manage to pass a spending bill and end the shutdown. In the meantime, political jockeying in Congress will likely give U.S. markets plenty to discuss while they await a fresh rate cut decision from the Federal Reserve. 

Gold is down by more than $350 compared to the October 20th all-time high. Silver has shed over $6.20/ozt, or 11%, since hitting an all-time high above $54.20 on October 16th. The gold-silver ratio is on pace to close Monday at a one-month high after setting a 2025 low just a couple weeks ago amid silver’s record price run. At the end of this week, traders will be able to view fresh inflation data for September, which could offer early cues about where interest rates may be heading when the FOMC meets for the last time of 2025 in December.