Gold hits one-month high, silver reaches record after Fed rate cut

The precious metals market surged on Thursday as the Federal Reserve's latest rate cut rippled through global financial markets, sending gold to its highest price in more than a month and silver into uncharted territory. Spot gold climbed 1.2 percent to $4,275.39 per ounce by late morning, marking its strongest showing since October 21. Silver's move was even more dramatic—the metal jumped 3.2 percent to $63.77 per ounce, hovering just below an intraday record of $63.93. February gold futures contracts rose 1.9 percent to $4,303.90.

The catalyst was straightforward: the Fed had cut its benchmark interest rate by a quarter point on Wednesday, the third such reduction in a row, and that decision sent the U.S. dollar tumbling to a seven-week low against a basket of other currencies. A weaker dollar makes gold and silver cheaper for international buyers, who must convert their own money into greenbacks to purchase these commodities. The mechanics are simple, but the effect was immediate and powerful across the precious metals complex. Platinum gained 2.5 percent to $1,698.10, while palladium rose 1.3 percent to $1,494.88.

Edward Meir, an analyst at Marex, observed that silver was acting as the locomotive pulling the entire sector higher. "Silver seems to be pulling gold up with it and it's also pulling up platinum and palladium," he said. "There's a lot of momentum behind it right now." That momentum reflects a deeper conviction among investors: the Fed may be cutting rates, but inflation has not retreated to the central bank's 2 percent target. In an environment where prices remain elevated and borrowing costs are falling, gold—an asset that generates no interest or dividends—becomes more attractive as a store of value.

Meir underscored the paradox. "Inflation hasn't really come back down to the Fed's 2% target, so when you're lowering rates in an inflationary environment that is still not optimum, and that's very bullish for gold." The Fed's own statement acknowledged this tension. Policymakers signaled they were likely to pause further rate cuts as they monitor both the labor market and inflation, which they described as "somewhat elevated."

The political backdrop adds another layer. President Trump has publicly advocated for lower interest rates since taking office in January, and his nominee for the next Federal Reserve chair—widely expected to be Kevin Hassett, the White House economic adviser—is seen as likely to maintain that pro-rate-cut stance. This suggests the Fed's current cutting cycle may have room to run, a prospect that continues to support precious metals prices.

Investors are now watching the calendar. The December 16 non-farm payrolls report will provide fresh data on employment and could offer clues about the Fed's next move. A strong jobs number might give policymakers reason to hold steady; a weak one could reignite rate-cut expectations.

On the institutional side, India's pension regulator approved investments in gold and silver exchange-traded funds for the country's pension funds on Wednesday. That decision could open a new channel for demand, as large pools of capital gain permission to allocate to precious metals. For now, though, the market is simply riding the wave of dollar weakness and rate-cut momentum, with silver leading the charge into uncharted price territory.