Gold and Silver Slip as Traders Weigh December Rate Cut Odds

 

Precious Metals Suffer Worst Drop in Months Amid Tariff Turmoil

(Bullion News Network) – Gold and silver prices pulled back on Monday as investors speculated about where interest rates may be heading. The FOMC cut interest rates for the second time of 2025 on Wednesday during its October meeting, but Federal Reserve Chair Jerome Powell cautioned reporters that a December rate cut is “far from” a foregone conclusion. December rate cut probabilities pulled back on Thursday and Friday, shrinking from 96.4% on October 24th to just 65% on Friday, according to CME FedWatch. The spot price of gold retreated on the news, losing more than $20 per troy ounce and settling at around the $4,000/ozt level. Silver prices also decreased, falling nearly $0.20 lower to below $49 per troy ounce. The price action was relatively even across the two markets, keeping the gold-silver ratio relatively unchanged above 82:1.

The United States government shutdown entered its 31st day on Friday. On Monday, the U.S. government plans to pause the distribution of SNAP benefits, which provide food benefits to over 40 million Americans. The uncertainty surrounding the shutdown remained a key price driver for precious metals throughout all of October. Both gold and silver hit all-time highs in mid-October, with gold reaching $4,381.58 per troy ounce and silver briefly shattering its all-time record and crossing $54 per troy ounce. The U.S. Senate failed to pass a funding bill in late September, causing a government shutdown that began on October 1st. 

Rate cut speculation is expected to play a sustained role in gold and silver price action throughout November. The Federal Reserve will not meet again until December 10th, at which point the Federal Open Market Committee (FOMC) will vote on whether to cut interest rates for a third consecutive time. Traders were bullish on a December cut prior to Wednesday’s meeting. Federal Reserve Chair Jerome Powell told reporters at the post-meeting press conference that a rate cut at the December meeting is far from guaranteed:

In the Committee’s discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a forgone conclusion—far from it. Policy is not on a preset course.

Gold and silver prices retreated sharply immediately following Powell’s statement, nearly erasing Wednesday’s gains in both markets. Gold and silver are safe haven assets that tend to retain or gain value when interest rates are falling, making interest rate speculation a strong key indicator for demand in the gold and silver markets. Market projections for a December rate cut fell on both Thursday and Friday, with the probability of a 25 basis point cut falling to a one-month low as of Friday afternoon. Precious metal prices retreated on the news, despite ongoing uncertainty surrounding the U.S. government shutdown. Gold and silver moved almost identically, keeping the gold-silver ratio largely unchanged.

Platinum-group metals also pulled back on Friday. Platinum lost over $30 per troy ounce to end the trading week, while palladium shed over $10. The price action favored palladium, shortening the gap between the two precious metals. UBS raised its platinum price projection, citing heightened demand, uncertainty, and supply chain concerns for the precious metal heading into 2026. 

Precious metal prices pulled back across the board on Friday as traders attempted to predict what the Federal Reserve will do when it meets in December. Fed Chair Jerome Powell’s comments undercut market confidence that 2025 will end with three consecutive interest rate cuts, driving gold and silver prices lower. Meanwhile, the government shutdown is poised to enter its 34th day on Monday, with millions of Americans expected to face a hunger crisis as the government pauses SNAP distributions starting November 3rd. 

While the report will likely not be released unless the U.S. Senate manages to end the government shutdown next week, the keynote economic report will come on Friday with the October U.S. employment report. This report could give traders a bit of insight into where interest rates are heading in December. Evidence of a strengthening labor market could cause the Fed to vote against cutting interest rates in December, especially if the news is paired with warming inflation readings later in November. Likewise, another declining jobs report may make a December rate cut more likely.