Gold and Silver Up On Inflation Data, China Green Energy Plans

 

Gold and Silver Up On Inflation Data, China Green Energy Plans

(Bullion News Network) – Gold gained again on Friday, adding over $10/ozt to its spot price and logging yet another all-time high to close the trading week. Silver also raced higher, gaining nearly $1 per troy ounce and creeping closer to its 2011 high. The price action favored silver, driving the gold-silver ratio down over 1.3 points to its lowest number of 2025. Gold prices are being driven primarily by rate cut speculation. Inflation numbers published on Friday matched median forecasts, paving the way for another 25 basis point rate cut at the Federal Reserve’s October meeting. Silver prices are on the move after China announced another ambitious green energy goal on Wednesday. As solar panels continue to play an outsized role in industrial demand for silver, China’s green energy initiatives are expected to be especially impactful for silver prices in Q4 2025 and 2026. 

Gold prices increased on both Thursday and Friday after shedding nearly $30/ozt on Wednesday. Price action in the gold market this week reacted primarily to Federal Reserve rate cut probabilities. On Friday, CME FedWatch projected an 89.8% probability that the Fed will opt to cut rates by 25 basis points at its October 29th meeting, up from 85.5% on Thursday. The August Personal Consumption Expenditures (PCE) numbers published on Friday morning came in about as expected, with the PCE index matching projections at 0.3%. The core PCE index, one of the Fed’s preferred measures of inflation, also moderated in August, falling to 0.2% compared to the 0.3% reading from July. After cutting rates by 25 bps earlier this month, the FOMC should be looking closely at inflation data to assess whether another cut in October is feasible. Friday’s moderate inflation reading breathed a bit more life into hopes that the FOMC will vote for another cut next month, although it is still too early to begin seeing the inflationary impacts of the Fed’s September cut.

The spot price of silver jumped on both Thursday and Friday, mostly due to optimism surrounding China’s commitment to green energy unveiled at the United Nations meeting on Wednesday. Chinese President Xi Jinping spoke at a United Nations climate summit meeting on Wednesday. The leader promised that China would reduce its pollution numbers, which are the highest in the world, by more than 10% by 2035. China leads the world in both solar energy capacity and solar panel production, and the Chinese solar energy sector is expected to play a major role in the nation’s efforts to curtail pollution this decade. Solar panels were the single largest industrial demand driver for silver in 2024, and Chinese demand for solar panels presents a sizable upside for the silver market.

Platinum also gained on the heels of China’s green energy announcement, with the precious metal adding more than $55 to its spot price per troy ounce Friday. Platinum landed in the green on both Thursday and Friday, climbing more than $100 per troy ounce in total before markets closed. Platinum and silver are both essential materials in the industrial manufacturing of green energy technologies, including solar panels. Platinum prices are up by more than 75% since the beginning of 2025, largely due to heightened demand from the solar energy sector and slowing electric vehicle sales in the United States. Palladium also gained on Friday, although it added just over $13/ozt to its spot price, driving the gap between the two main platinum group metals higher.

Next week, traders will be able to review the September U.S. employment report. Slowing job growth in both July and August motivated the Federal Reserve to cut interest rates, so this report will be especially important for investors looking for hints about how the Fed may adjust rates in October. The median forecast projects that 45,000 new jobs will have been added in September, up from 22,000 in August. A strong uptick in the U.S. unemployment rate or another drop in jobs added could boost the odds of a large rate cut in October, especially if that data is paired with favorable inflation readings in October. 

Gold, silver, and platinum all gained on Friday. Gold prices increased after a favorable inflation reading suggested that hopes for another rate cut in October may still be alive. Silver and platinum prices increased on both Thursday and Friday after China committed to reducing pollution, a move likely to lead to heightened demand for both metals as the country works to build its already robust green energy and solar panel industries.