Steady Fed rate led gold & silver's CPI gains fall

Gold and silver's CPI soften over steady fed rate 

At the juncture Colin Shah, MD, Kama Jewelry said, “The decision by the US Fed to keep the policy rate intact for the seventh consecutive time comes as per the industry expectations. Although the inflation has cooled down, it has still not come under the Fed’s expected range, thereby deferring the possibility of three rate cuts, which we could have possibly seen during this calendar year. 

As per the forecast by Fed, it has hinted that it may start slashing rates from next year onwards wherein a rate cut of 100bps is in focus. However, we will have to wait and watch how the inflation numbers play out, which will further decide the possibility of rate cuts next year. 

Gold prices saw some softness post Fed’s announcement in domestic market. Since Q2 of financial year is usually a dull phase due to monsoon and shraadh, we expect the prices to remain dampened during this period. Nevertheless, we hope for the demand to see a gradual uptick at the onset of festivals and remain buoyant till the end of FY25.”

Dean Belder- the known metal analyst also suggested, the US Federal Reserve announced recently; that it will hold its benchmark interest rate steady at 5.25 to 5.5 percent following its two day Federal Open Market Committee (FOMC) meeting. This marks the seventh time the central bank has maintained its policy since July 2023, when it last raised the rate.  

Markets were mixed following the news on the 12th. While it dropped sharply in midday trading, the S&P 500 (INDEXSP: .INX) ultimately saw a slight increase by the end of the trading day, closing up 45 points. 

The Nasdaq-100 (INDEXNASDAQ: NDX) also posted a gain, moving up 1.33 percent to close at 19,465 points, and the Dow Jones Industrial Average (INDEXDJX: .DJI) saw a small loss to close at 38,712. Meanwhile, precious metals prices saw high volatility throughout the day. The gold price spiked as high as US$2,340 per ounce following the release of the CPI data, and neared that mark leading up to the Fed decision.

The silver price followed the same pattern and broke above US$30 per ounce during both upward swings.  

However, both precious metals fell back down on the news that rates will not move. As of 4:00 p.m. EDT, gold was trading at US$2,321.26 and silver was trading at US$29.62, still above their prices at the start of the day.