Fueled by growing anticipation of a Federal Reserve rate cut, precious metals are experiencing a significant rally, with gold prices nearing record highs and silver prices surging past $80.
Gold's Spot Price and Market Drivers
Gold has broken above $4,600 per ounce, reaching intraday peaks near $4,625–$4,630 before consolidating around $4,590–$4,615. Investors are increasingly piling into gold, driven by expectations that the U.S. Federal Reserve will cut interest rates later this month. This near-certain policy shift is prompting questions about how far the rally can extend, with some analysts speculating whether gold could reach $4,000 per ounce. A weaker U.S. dollar has also contributed to the surge, with the Dollar Index (DXY) falling significantly in 2025. Since precious metals are priced in dollars, a weaker DXY increases their global purchasing power. Concerns about the U.S. government's debt, expectations of further Fed rate cuts, and central banks reducing dollar exposure are also keeping structural pressure on the currency.
Silver's Explosive Gains
Silver has moved even faster, jumping more than 4.5% in a single session and breaking above $83 per ounce, with follow-through toward the $85–$86 zone. The long-term average gold-silver ratio is about 70:1, and in prior bull-market peaks, including 1980 and 2011, it tightened to 31–35:1. That means silver is still undervalued relative to gold if this precious-metals cycle continues, leaving room for further upside as capital rotates down the metals curve.
Central Bank Activity and Geopolitical Factors
Central banks worldwide have shifted from net sellers to aggressive buyers of gold. Countries like China, India, Poland, and Turkey continue expanding their gold holdings as they diversify away from dollar-denominated assets. This diversification signals growing concerns about fiat currency stability and the long-term structure of the global monetary system. Geopolitical tensions are also intensifying.
Rate Cut Expectations and Real Yields
The Federal Reserve had slowed the pace of easing by late 2025, following three 25-basis-point rate cuts. Policymakers signaled caution, with projections pointing to limited further cuts in 2026 amid lingering inflation risks. Historically, environments such as these favor gold and silver, which benefit when confidence in monetary guidance weakens. U.S. 10-year Treasury yields fell from 4.8% to near 4% in 2025, while inflation stayed elevated. That pushed real yields below 1%, the threshold that has historically marked turning points for precious metals.
Expert Opinions and Market Analysis
According to the World Gold Council, gold performs best when real yields approach zero because bonds stop protecting purchasing power. Some analysts believe threats to the reserve status of the U.S. dollar are multiplying due to U.S. twin deficits and the weaponization of the currency. They also point to global central banks diversifying their forex reserves by reducing their dependence on the U.S. dollar and adding more gold. Silver has also benefited from strong industrial demand linked to clean energy, EVs, and grid infrastructure, adding a structural demand layer to the rally.
