The shift in investor sentiment comes as U.S. Treasury bond yields decline, making non-yielding assets like gold more attractive. Concurrently, the U.S. Dollar (USD) is struggling to maintain its gains, adding to gold’s upward momentum.
Despite this bullish trajectory, expectations of prolonged high interest rates from the Federal Reserve, as signaled by the hawkish FOMC minutes, could limit gold’s short-term gains.
Currently, markets are pricing in a 38 basis point rate cut by December, according to LSEG data, but Fed officials remain cautious about inflation risks.
Silver Gains Amid Economic Uncertainty
Silver (XAG/USD) is also benefiting from the risk-off sentiment, trading at $32.83 after reaching an intra-day high of $32.87.
The weaker USD and fears of a trade war are supporting silver prices, as investors look to diversify their portfolios with safe-haven metals.
However, uncertainty about the Fed’s interest rate strategy is preventing a more robust rally.
