Lower borrowing costs typically weigh on the dollar and Treasury yields, improving the relative appeal of non-yielding assets such as precious metals.
Fed Policy Shift Keeps Gold in Focus
Markets are increasingly betting that the Fed will shift toward a more accommodative stance, with the CME FedWatch Tool showing traders pricing in a high probability of rate cuts in October and December. Analysts say this policy pivot continues to serve as a tailwind for gold, particularly as real yields flatten and inflation expectations remain elevated.
“Gold’s resilience is being driven by the market’s belief that the Fed is nearing the end of its tightening cycle,” said a commodities strategist at Bloomberg Intelligence.
Meanwhile, silver has mirrored gold’s stability, supported by its dual role as both an industrial and safe-haven asset. The metal is benefiting from demand in clean energy sectors, especially solar manufacturing, alongside macroeconomic uncertainty.
Political and Geopolitical Uncertainty Adds Support
Beyond monetary policy, safe-haven flows remain strong as global markets confront persistent political and geopolitical headwinds. The U.S. government shutdown, now extending into a second week, has raised concerns over fiscal management and economic continuity.
Investors remain wary of potential ripple effects on growth and market liquidity, leading to renewed interest in hard assets.