Gold, silver hit record highs on Fed rate-cut bets

[BENGALURU] Gold and silver hit record highs on Monday (Dec 22) as softer US labour data and a tame inflation reading fuelled bets the Federal Reserve will cut interest rates in January.

Spot gold climbed 1 per cent to an all-time high at US$4,384.50 an ounce (oz) by 10.03 am. US gold futures added 0.7 per cent to US$4,416.30.

Spot silver rose 2.2 per cent to hit a record high at US$68.65.

Gold, a traditional safe-haven asset, is up 67 per cent for the year, driven by geopolitical and trade tensions, robust central bank buying, and hopes of lower rates next year. Silver has gained 125 per cent year-to-date, outpacing gold.

US consumer prices rose 2.7 per cent year on year in November, data showed, falling short of the 3.1 per cent increase forecast by economists polled by Reuters.

Futures on the federal funds rate indicated a slightly increased chance of the Fed trimming rates at its January meeting, after the data.

Last week, data showed that the US unemployment rate rose to 4.6 per cent, surpassing a Reuters poll of economists’ estimates of 4.4 per cent, the highest since September 2021.

Fed governor Christopher Waller, who is in the running to be chosen as Fed chair Jerome Powell’s successor, said last week that the Fed still had more room to cut rates.

Non-yielding assets such as gold tend to do well in a low-interest-rate environment.

Elsewhere, Goldman Sachs sees gold prices climbing 14 per cent to US$4,900/oz by December 2026 in its base case, on structurally high central bank demand and cyclical support from Fed interest rate cuts, the brokerage said in a note on Thursday.

Platinum rose 2.6 per cent to US$2,028.34, a more than 17-year high. Palladium added 3.8 per cent to US$1,772.74, a near three-year high. REUTERS