Gold prices dipped during the European session, falling to around $2,575, as investors adjusted positions ahead of the Federal Open Market Committee (FOMC) meeting. The US dollar’s slight recovery from its yearly low added downward pressure on the precious metal. However, expectations of a more aggressive rate cut by the Federal Reserve could provide support for gold in the coming days.
Meanwhile, silver prices (XAG/USD) continue to climb, trading at $30.85, driven by growing demand from industries like solar energy and medical applications, along with bearish trends in the US dollar.
Fed Rate Cut Speculation Weighs on Gold
Gold investors are cautious ahead of Wednesday’s FOMC meeting, with a 60% chance of a 50-basis-point rate cut, per CME Group’s FedWatch Tool. Despite strong Empire State Manufacturing Index data, the US dollar has struggled, and Treasury yields have hit lows not seen in over a year.
Gold traders await Fed Chair Jerome Powell's remarks and the FOMC's economic projections, which could shape gold prices (XAU/USD) and market sentiment for the rest of 2024.
Silver Boosted by Industrial Demand and Fed Expectations
Silver prices have maintained a positive bias, bolstered by industrial demand and the ongoing weakness in the US dollar. Expectations of a significant Fed rate cut have also added upward momentum to silver (XAG/USD).
Several factors are supporting silver’s current rally:
- Rising demand in the solar and medical industries
- Weakness in the US dollar, making silver more attractive
- Growing geopolitical uncertainties
Bullish predictions from industry experts have further boosted investor confidence in silver, which has gained attention as a key industrial and safe-haven asset. With silver trading just below $31, analysts are optimistic about its continued upward trend, especially if the Fed opts for a larger rate cut.
China Silver Group’s Stock Surge: A Silver Price Indicator?
Shares of China Silver Group Limited (HKG:815) jumped 15% last week, offering a short-term boost for silver-related investments. However, the stock remains down 74% over the last five years, raising concerns about its long-term sustainability.
Despite the recent gains, the company's weak balance sheet and a five-year annualized return of -12% signal potential risks for long-term investors. If this uptick in China Silver Group’s stock signals a broader recovery in the silver industry, it could positively affect silver prices. However, caution is warranted given the company's history of underperformance.
Bitcoin vs. Precious Metals: Contrasting Views Amid Fed Speculation
As the Fed rate cut looms, Robert Kiyosaki predicts gains for Bitcoin, gold, and silver, expecting investors to shift from fiat currencies to “real assets.” In contrast, Peter Schiff remains bearish on Bitcoin, favoring precious metals like silver, which recently surged above $31. Schiff argues Bitcoin will struggle, while silver and gold will continue to outperform, especially during economic uncertainty.