Gold and silver slightly down after Fed cut rates

Gold and silver prices have pulled back slightly after the Federal Reserve cut US interest rates as expected yesterday.

The Fed cut rates by 25 basis points in line with market expectations, but despite the cuts the US dollar index rose and gold and silver prices dipped somewhat. After spending much of the week around $3,685 and even briefly spiking to a new high of $3,712.97, gold has dipped to around $3,660 at the time of writing. In GBP gold is holding around £2,680 and in euros at €3,090.

Silver followed a similar pattern, spending the start of the week above $42 per ounce, but falling to $41.80 at the time of writing. In GBP this puts silver at £30.60 and in euros at €35.20.

A rate cut would typically be considered positive for precious metals, weakening the US dollar, but yesterday’s cut had clearly been fully priced-in by markets for some time. Rumours/hopes of a possible 50 basis point also likely played a role in the move, as markets were disappointed to see only a 25bp cut in the end, something that could be considered a hawkish cut.

The Fed’s statement also struck a cautious tone, suggesting more cuts ahead, but reminding that inflation was still above target. Any hopes that the Fed might cave into pressure from the White House for steeper cuts were likely dashed, and this is why the dollar actually gained from the cut, and pushed gold and silver lower.

Looking ahead, markets are still expecting another cut in October (given an 89.8% chance according to the CME FedWatch tool), and potentially another cut in December. With the next FOMC meeting taking placing on the 29th of October however, there is plenty of time for expectations to change. If US employment figures and inflation come down further the Fed will have more room to cut, but if employment holds up after a rocky summer and US tariffs begin to feed into inflation, the Fed could decide to hold their ground in October.

The Bank of America believe that gold will still hit $4,000 per ounce by Q2 of 2026, stating that gold always rises when the Fed begin cutting rates despite stubborn inflation. They also noted that gold is not just benefitting from monetary policy easing, and that geopolitical concerns and the general move away from the dollar will also support gold going forward.