Gold, silver sell off on worries about hawkish Fed rate cut

NEW YORK (December 8) Gold and silver prices are lower in midday U.S. trading Monday. Both precious metals markets are seeing selling pressure on worries the U.S. Federal Reserve will lean hawkish on its rhetoric despite delivering a rate cut this week. Also, prompting some selling pressure in gold and silver is news just out that U.S. producer inflation reports for October and November that were expected to be released later this week have now been delayed until January. That throws some more uncertainty into the present U.S. inflation situation. February gold was last down $27.60 at $4,215.50. March silver prices were down $0.788 at $58.28.

The Federal Reserve’s Open Market Committee (FOMC) begins its monetary policy meeting Tuesday morning, with the meeting ending Wednesday afternoon with an FOMC statement and then a press conference from Fed Chair Jerome Powell. Markets are pricing in a 90% chance of a 0.25% U.S. interest rate cut at this week’s FOMC meeting. However, market expectations are growing that the FOMC statement and Fed Chairman Powell’s comments at his press conference may lean hawkish on U.S. monetary policy—namely due to worries about sticky inflation.

In other news, the World Bank reports China’s central bank added to its gold reserves for a 13th straight month, according to data released on Sunday. Bullion held by the People’s Bank of China rose by 30,000 troy ounces last month, bringing the total to around 74.12 million troy ounces. The current buying cycle began in November 2024. Central-bank purchases worldwide ramped up in October after a lull in the middle of the year, according to the Council.

The key outside markets today see the U.S. dollar index firmer. Crude oil prices are weaker and trading around $59.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently around 4.15%.

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