Gold gains, silver tops $64 as traders focus on Fed rate path

Gold advanced and silver topped a record above $64 an ounce as traders took comfort in the direction of US interest rates.

Bullion gained as much as 1.2% in US trading while Treasury yields and the dollar declined. Silver climbed as much as 4%. 

Central bank policymakers Wednesday left the door open to more easing next year, even though a quarter-point cut drew three dissents. Traders stuck to bets on two cuts in 2026, even as the Federal Reserve’s projections signaled only one. Data on the latest US unemployment benefits, showing jobless claims jumped the most since the onset of the pandemic, didn’t alter trader views.

“Now that the Fed looks set to expand the balance sheet by some half a trillion dollars, it’s positive for gold,” said Bart Melek, global head of commodity strategy at TD Securities. Bearish wagers on bullion before the rate decision Wednesday “are getting shaken out today,” he added. 

Despite ambiguity by US Federal Reserve Chairman Jerome Powell surrounding future cuts, there will be a new monetary sheriff in town in May, who is very likely to be a dove, according to Melek. “This suggests the current liquidity measures may be even more expansionary,” he added.

A dovish Fed is a positive for precious metals, which typically benefit in a low-rate environment. 

Gold has surged more than 60% this year and silver has gained 116%, more than doubling, with both metals on track for their best annual performances since 1979. The scorching rallies have been underpinned by elevated central-bank buying and a retreat by investors from sovereign bonds and currencies. 

Holdings in gold-backed exchange-traded funds have risen every month this year except May, according to the World Gold Council. Meanwhile, silver has been bolstered in recent weeks by surging demand, as well as tightness and dislocations across major trading hubs.

“Silver is breaking out to new all-time highs as markets increasingly price in a more favorable macro backdrop for 2026, supported by rising expectations for a more dovish Federal Reserve. We expect the silver market to remain in deficit next year, driven by rebounding industrial demand, continued strength in solar and modest supply growth,” said Trevor Yates, a senior investment analyst at Global X ETFs.

A large options position in iShares Silver Trust (SLV), the largest silver ETF, may have helped accelerate the rally. There are more than 21,000 open $57 calls expiring Friday. Dealers who short the contracts may have needed to buy shares to rebalance positions, adding fuel to the rally.

Gold rose 1.1% to $4,273.25 an ounce as of 2:44 p.m. in New York. Silver climbed 3.1% to $63.72. Platinum and palladium gained. The Bloomberg Dollar Spot Index fell 0.3%.

(By Yvonne Yue Li)