Gold prices up, silver hits record after US Fed delivers rate cut and leans dovish

By Admin

12 Dec, 2025

Introduction
The global precious metals market is experiencing one of its most powerful rallies in decades. Gold and silver prices surged again after the US Federal Reserve delivered a widely expected interest-rate cut and signaled a softer outlook ahead. With gold up more than 60% this year and silver more than doubling, both metals are on track for their strongest annual performance since 1979.

Fed Rate Cut Boosts Precious Metals
Gold prices rose for a third consecutive day following the Fed’s latest policy decision. Bullion advanced as much as 0.5% to near $4,248 an ounce as US Treasury yields and the dollar weakened after the Fed’s final meeting of the year. As of 9:50 am in Singapore, gold was trading at $4,238.23 per ounce, while silver prices climbed 1.5% to a record $62.7249. Platinum and palladium also gained, and the Bloomberg Dollar Spot Index slipped 0.1%.

A Divided Vote Reflects Growing Uncertainty
The Federal Open Market Committee voted 9-3 to cut the federal funds rate by a quarter point to a range of 3.5%-3.75%. This marked the first time since 2019 that three officials dissented on a policy decision, highlighting differing views within the central bank. While the Fed maintained its outlook for one more rate cut in 2026, it softened the wording of its statement to reflect greater uncertainty about future moves.

Why a Dovish Fed Supports Gold
Lower interest rates typically benefit gold and silver, as these metals do not yield interest. The Fed’s dovish shift improved overall sentiment in the precious metals market. According to Charu Chanana, chief investment strategist at Saxo Markets, the market reaction was measured, as much of the cut was already priced in. She described the sentiment as “a relief, not euphoria,” and noted that the split vote discouraged traders from aggressively pushing prices higher on the day.

Strong Annual Performance Driven by Key Factors
Gold’s 60% surge and silver’s more-than-double rally this year reflect growing global demand. Central-bank buying has remained elevated, while investors have been retreating from sovereign bonds. Gold ETF holdings have increased every month except May, according to the World Gold Council. Chanana added that widening fiscal deficits, persistent geopolitical tensions, de-dollarisation trends, and steady central-bank purchases suggest the gold bull market may continue.

Fed Liquidity Measures Add Support
The Fed also announced it would begin buying $40 billion of US Treasury bills per month from 12 December to rebuild reserves. This move is expected to increase liquidity and further support gold prices in the coming months.

Political Signals Reinforce Market Expectations
Adding to the dovish tone, US President Donald Trump repeated his view that interest rates should be much lower, as the search for the next Fed chair nears conclusion. Markets now anticipate a continued soft policy approach that could keep precious metals in upward momentum.

Conclusion
With record-breaking silver prices and gold nearing all-time highs, the precious metals market remains in a powerful uptrend. Supported by central-bank purchases, geopolitical risks, fiscal pressures, and a dovish Federal Reserve, gold and silver appear poised to maintain their strength as investors seek safety, stability, and long-term value.