Post by : Saif Rahman

Gold prices remained elevated near a seven-week peak on Friday as investors closely monitored the U.S. Federal Reserve's latest stance on interest rates. The strong gold performance coincides with traders predicting additional interest rate cuts in the upcoming year, typically promoting precious metal prices. Meanwhile, silver held its ground, lingering close to a record high achieved the previous day.

In early trading, spot gold dipped 0.3% to $4,270.89 per ounce, but was poised for a nearly 2% weekly gain. It hit its highest point since October 21 on Thursday. U.S. gold futures also fell by 0.3% to $4,302.10.

A key factor in gold’s resilience is the declining U.S. dollar, which has seen a three-week downtrend. A weaker dollar renders gold more affordable for buyers using different currencies, thus spurring demand.

Market analysts suggest investors anticipate at least two interest rate cuts in the upcoming year, contrasting with the Fed’s projections of just one cut. Soni Kumari from ANZ noted that confidence remains high that borrowing costs will further decrease in 2026, fueling the uptrend in gold prices.

On Wednesday, the Federal Reserve enacted its third interest rate cut of the year. While the decision saw divisions among officials, Fed Chair Jerome Powell's message was less aggressive than many had anticipated. He indicated that subsequent rate adjustments will rely on clearer signals of inflation deceleration and a slowing job market.

Recent U.S. economic data revealed that jobless claims surged to their highest level in nearly four and a half years. Nevertheless, experts believe this rise doesn't currently indicate substantial weakness in the job market.

Gold typically thrives in low-interest-rate environments, as it yields no interest or dividends. Conversely, falling interest rates enhance its appeal to investors seeking a secure and steady asset.

Silver, too, continued its positive trend this week. Spot silver maintained at $63.57 per ounce following its record high of $64.31 on Thursday. It is poised for a remarkable weekly gain exceeding 9%.

Silver prices have more than doubled this year owing to heightened industrial demand, depleting supplies, and its recent classification as a critical mineral in the U.S. Various sectors, including electronics, renewable energy, and automotive manufacturing, heavily depend on silver, sustaining robust demand.

Analysts cite physical shortages, inflows into exchange-traded funds, and anticipations of further rate reductions as pivotal for silver's market strength. Ajay Kedia from Kedia Commodities in Mumbai believes the chart patterns for silver indicate a potential rise to $75 in the near future.

Currently, both metals are poised for the next significant data release—the U.S. non-farm payrolls report scheduled for next week. This report will provide investors with more insights regarding the American job market's health and future Fed policy directions.

For now, gold and silver reap benefits from global uncertainties, a weaker dollar, and expectations of more lenient financial conditions in the coming year.

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