Gold and Silver Up as Rate Cut Odds Surge

 

Gold and Silver Up as Rate Cut Odds Surge

(Bullion News Network) – The spot prices of precious metals jumped on Monday as expectations for a December interest rate cut from the Federal Reserve surged. Gold prices increased by over $65 per troy ounce Monday, while the spot price of silver added more than $1.60/ozt. The price action favored silver, driving the gold-silver ratio more than 1.25 points lower toward 80:1. Platinum and palladium also gained to begin the shortened trading point, with platinum adding more than $30/ozt to its spot price and palladium gaining around $18 per troy ounce.

The projected likelihood that the Fed will vote to cut rates for a third time at its December meeting jumped from 42.4% last week to more than 85% today, per CME FedWatch. A combination of rising unemployment figures and commentary from Federal Reserve officials is behind the surge in December interest rate cut odds. Most notably, Federal Reserve of New York President John Williams told reporters last week that he views a rate cut in December as distinctly possible.

I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral.

Market expectations for a December interest rate cut also jumped after a mixed-result jobs report published last week. The September U.S. employment report, which was delayed in October due to the United States government shutdown, arrived much hotter than expected, suggesting that the American labor market may have gained steam in September. The United States economy added 119,000 jobs in September, substantially higher than the median forecast of 119,000 jobs. Despite the better-than-expected job creation reading, the U.S. unemployment rate jumped to 4.4% in September – a four-year high. Rate cut projections jumped almost immediately on the news; the Federal Reserve’s decision to cut interest rates in September was partially due to concerns that the U.S. labor market was beginning to cool down.

Platinum and palladium prices also jumped on Monday. The spot price of platinum gained around $30 per troy ounce, while palladium prices increased by over $15/ozt. The price action favored platinum, expanding the platinum-palladium price gap to nearly $140 per troy ounce.

The Federal Reserve will meet again on December 10th, with a third consecutive rate cut on the line. This is a shortened trading week, with markets closing on Thursday in the U.S. for Thanksgiving. The November consumer confidence report is due for publication on Tuesday and might give traders advanced insight on Americans’ expectations heading into the holiday season. Initial jobless claims for the week are planned for release on Wednesday, followed by the Chicago Business Barometer (PMI) on Friday, November 28th.

In the medium term, traders should expect rate cut speculation to play a continued role in gold and silver price action leading up to the Federal Reserve’s December meeting. Rate cut expectations have driven precious metal prices throughout 2025, and the FOMC seems like it could potentially go either way when it next meets in December. For now, markets are confident that a rate cut is likely, given evidence of heightened unemployment and a few key dovish comments from FOMC voters. Gold, silver, and other safe haven assets have surged as a result of these increased expectations. Whether this trend will continue into early December is still unclear.