Precious Metals Inch Lower Ahead of FOMC Rate Cut Decision

 

Gold and Silver Inch Lower Ahead of FOMC Rate Cut Decision

(Bullion News Network) – Precious metals inched lower on Monday during a relatively calm trading day. The spot price of gold pulled back by approximately $6.50 per troy ounce. Silver lost less than $0.10/ozt to close the day above $58.25 per troy ounce. The price action had only a marginal effect on the gold-silver ratio, pushing it 0.06 higher to a couple cents below 72:1. Platinum and palladium saw larger price movements on the day, with platinum adding $11/ozt to its spot price and palladium gaining more than $20 per troy ounce. The price action narrowed the price gap between the two platinum-group metals; platinum ended Monday worth approximately $160 more than palladium per troy ounce.

The muted trading day came ahead of the Federal Reserve’s rate cut decision, scheduled for release on Dec. 10. Markets remained highly confident that the Fed will vote to cut interest rates heading into the week of the final FOMC meeting of the year. On Monday, CME FedWatch projected an 87.2% probability that the committee will vote for a 25 basis point rate cut. This projection was up from 86.4% on Dec. 1 and 66.9% on Nov. 7. A combination of mixed-bag U.S. labor market data and favorable commentary from Fed officials drove market confidence in a December rate cut sharply higher in November, reversing a downward trend sparked by a more hawkish statement from Powell at the FOMC’s October meeting.

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 futures and precious metal prices retreated immediately in October during Powell’s speech, with CME FedWatch’s projections for a December rate cut falling to a low of 45.9% following Powell’s post-meeting press conference. Chair Powell’s hawkish approach was backed by Susan Collins, President of the Federal Reserve of Boston, in a separate statement.

Given my baseline outlook, it will likely be appropriate to keep policy rates at the current level for some time to balance the inflation and employment risks in this highly uncertain environment […] I see several reasons to have a relatively high bar for additional easing in the near term.

If nothing else, movements in rate cut futures throughout November mirrored the uncertainty that helped drive both gold and silver to multiple all-time highs throughout 2025. Last month, rate cut odds surged after John Williams, President of the Federal Reserve of New York and a voting member on the FOMC, suggested that the outlook for easing rates was strong. “I still see room for 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 told reporters. Williams’ commentary drove precious metal prices higher in the days that followed, and CME FedWatch’s projections have remained solidly in the 85%+ range since.

Rate cut speculation played an outsized role in price action in the precious metals market throughout 2025, especially in Q4 following the Federal Reserve’s decision to execute the FOMC’s first interest rate cut of the year in September. Both gold and silver secured fresh all-time highs in November, and a combination of general market uncertainty and rate cut optimism has become a driving force in the safe haven asset market.

Gold pulled back on Monday, shedding around $6.50 during a muted trading day just two days before the Federal Reserve is expected to cut interest rates for the third time of 2025. Silver prices retreated by a similarly slim margin, with the precious metal shedding just $0.09. Heading into Wednesday’s meeting, traders should expect markets to pay careful attention to the tone and tenor of Chair Powell’s post-meeting press conference – rather than just the rate cut decision itself. 2025 has already demonstrated the post-meeting press conference’s ability to impact markets, even after the decision is priced in. While markets take a breather ahead of the final Fed meeting of the year, Powell’s speech could play a major role in how gold and silver kick off 2026.