Post by : Saif Rahman

Gold prices eased on Thursday as the U.S. Federal Reserve's split decision on interest rates left market participants grappling with uncertainty regarding future borrowing costs. In contrast, silver maintained its remarkable ascent, reaching a new record high.

Spot gold fell by 0.2% to $4,221.49 per ounce after hitting its highest point in almost a week. Meanwhile, U.S. gold futures for February delivery increased by 0.6% to $4,249.70 per ounce. This mixed trend highlights the ambiguity as investors interpret the Fed's recent policy announcements.

The Federal Reserve announced a 25 basis point cut in its core interest rate on Wednesday; however, the decision was sharply contested by several policymakers. Six officials voted against the cut, an unusual occurrence for the central bank. The Fed further indicated that forthcoming rate cuts may be limited unless labor market conditions deteriorate or inflation declines significantly. Chairman Jerome Powell added to the complexities by withholding information about the timeline for subsequent cuts.

Market analyst Tim Waterer noted that gold's ability to sustain its previous momentum was curtailed by the Fed's indication that additional rate cuts may be infrequent. Generally, gold benefits from lower interest rates, as it yields no interest itself, becoming a more appealing asset in times of financial uncertainty.

With new U.S. employment and inflation data expected next week, alongside a comprehensive economic growth report for the third quarter, investors are keenly awaiting insights that might influence Fed policy in the upcoming months.

While gold faced challenges, silver made significant gains, with spot silver rising 0.8% to $62.25 per ounce after reaching an earlier peak of $62.88. Remarkably, silver has experienced a 113% surge this year, driven by robust industrial demand, dwindling global stocks, and its recent inclusion in the U.S. critical minerals list.

Market expert Ilya Spivak remarked that silver has been displaying strong independent momentum. He anticipates that the next critical price level will be around $64 per ounce, indicating potential for further increase if demand persists.

The performance of other precious metals was mixed; platinum saw a rise of 0.3% to $1,660.50 per ounce, while palladium decreased by 0.2% to $1,479.70 per ounce. Such fluctuations reflect the broader atmosphere of uncertainty in financial markets as investors remain vigilant regarding central bank strategies and economic indicators.

The disparity between gold and silver illustrates the varying influences on precious metals. Gold is more susceptible to changes in interest rates and investor confidence, whereas silver’s recent ascent is bolstered by industrial applications and supply constraints. As long as expectations regarding rate cuts remain uncertain, gold may proceed cautiously, but silver seems to be on a robust upward trajectory, fueled by growing demand across technology, manufacturing, and renewable energy sectors.

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