Gold Down, Silver Up Ahead of FOMC Decision Week

 

Gold Down, Silver Up Ahead of FOMC Decision Week

(Bullion News Network) – The spot price of silver added over $1.25 per troy ounce on Friday, gaining a bit more ground above the new $58/ozt support. Friday’s gains offset a drop on Thursday, bringing the precious metal to a new high on the week. Gold retreated marginally, shedding around $9 per troy ounce. The price action once again favored silver, driving the gold-silver ratio near a years-long low at just under 72:1. Platinum and palladium also gained on Friday, with platinum adding nearly $3/ozt and palladium gaining over $9 per troy ounce. This did little to shrink the gap between platinum-group metals; platinum still leads palladium by approximately $220/ozt. The muted market performance comes less than a week before the Federal Reserve meets for the last time in 2025.

The Federal Open Market Committee (FOMC) will meet next Wednesday, Dec. 10, to decide whether to cut interest rates for a third consecutive time. Interest rate speculation has played an outsized role in precious metal price performance throughout Q4 following the FOMC’s decision to cut rates by 25 basis points in both September and November. Despite some jitters throughout November, traders overwhelmingly expect the Fed to pull the lever and cut interest rates by another 25 bps next Wednesday. As of Friday, CME FedWatch projected an 87.2% probability that the FOMC will vote to cut rates at its December meeting. This is up from a projection of 62% on November 5th. 

Next week will not see the release of meaningful economic data points, and a mixed-bag U.S. employment report released in November seems to have bolstered market confidence that the FOMC will indeed cut rates again in December. Adding to the speculation was a comment from John Williams, President of the Federal Reserve of New York:

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.

Williams is a voting member on the Federal Open Market Committee, and his dovish commentary sent both rate cut odds and precious metal prices higher. Prior to Williams’ speech, it was unclear whether the late employment and inflation data releases would dampen the odds that the Federal Reserve would vote for a third rate cut in December. In his post-decision press conference after the November meeting, Federal Reserve Chair Jerome Powell cautioned investors against betting big on a December cut:

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.

Rate cut odds and precious metal prices pulled back immediately in the aftermath of Powell’s speech, but more recent developments seem to have quelled the market’s concerns. With a rate cut appearing increasingly likely heading into 2026, precious metal investors are likely waiting to see what other economic data developments drive markets in the new year. Cutting interest rates is generally considered an inflationary action, and it is unclear at this point whether the 2-3 rate cuts of 2025 will have a meaningful impact on consumer prices. Traders should expect inflation data, along with the U.S. employment situation, to play a sustained role in safe haven asset values heading into Q1 of 2026.