Precious Metals Soar as Fed Prepares to Cut Interest Rates

 

Precious Metals Soar as Fed Prepares to Cut Interest Rates

(Bullion News Network) – Gold and silver prices climbed again on Monday ahead of the Federal Reserve’s September meeting. The spot price of gold increased by nearly $40 per troy ounce, setting a fresh all-time high at more than $3,680/ozt. Silver prices also jumped to begin the week, with the spot price of silver increasing by over $0.50 per troy ounce to set a 14-year high above $42.80/ozt. The price action slightly favored silver, driving the gold-silver ratio marginally lower toward 86:1. The Federal Reserve’s Federal Open Market Committee (FOMC) will meet on Wednesday and is widely expected to cut interest rates.

CME FedWatch projects a 100% probability that the FOMC will vote to cut rates on Wednesday. Forecasters believe that a 25 basis point rate cut is most likely; CME FedWatch anticipates a 95.8% chance that the Fed will cut rates by 25 bps and a 4.2% probability that the committee will opt for a larger 50 bps cut. Gold and silver prices increased throughout September 2025 amid mounting expectations that the Federal Reserve will cut interest rates, which typically leads to heightened demand for safe haven assets like gold and silver.

The dovish Federal Reserve signals come on the heels of two poor U.S. employment reports. Job growth slowed in both July and August, suggesting that the American labor market may be cooling. Faced with sticky inflation data and a cooling jobs market, Federal Reserve Chair Jerome Powell suggested last month that the “shifting balance of risks may warrant adjusting our policy stance.” Since that August comment, another dour labor market report further drove speculation that the FOMC will vote to cut interest rates at its September meeting. The speculation pushed safe haven asset prices higher, with both gold and silver logging record highs as speculation continued to mount throughout September.

Earlier this year, Powell expressed concerns that a combination of rising inflation rates and stalling employment may put the FOMC in a “challenging scenario” where the Fed’s goals of stabilizing prices and maximizing employment “are in tension” with one another. Cutting interest rates can lead to higher consumer prices by decreasing the cost of borrowing money, but doing so can also help alleviate stress in the labor market. Conversely, raising rates may help mitigate inflation, but it also often leads to slower job growth by increasing the cost of borrowing and stifling retail spending. 

Inflation remained elevated heading into mid-September, logging its highest annual rate since January 2025, but failed to reach a high enough level to justify raising rates. Conversely, job reports from July and August suggested that the U.S. employment market may be on the decline. As a result, analysts expect the Federal Reserve to cut interest rates by either 25 or 50 basis points at its meeting on Wednesday. 

Platinum group metals gained marginally on Monday, with platinum adding just over $11 per ounce to its spot price and palladium gaining less than a dollar. The price action continued to favor platinum, which is overvalued compared to palladium by nearly $200 per troy ounce. 

The FOMC will announce its interest rate decision on Wednesday, September 17th. Analysts anticipate that the committee will most likely cut rates by 25 basis points. Federal Reserve Chair Jerome Powell will speak to reporters at a press conference shortly after the decision is finalized.