Precious Metals Rally Following Fed Rate Decision

Gold futures reversed earlier losses following the Federal Reserve's 25-basis-point rate cut announced at 2:00 PM ET. The yellow metal surged $35 in the hour after the decision, reaching an intraday high of $4,268. Although prices retreated from that peak, gold continued trading firmly above $4,250, last seen at $4,257—up $20.40 or 0.49% on the day.

Silver demonstrated similar strength after establishing a new record earlier in the session. Following brief pre-announcement pressure, the white metal gained $1.35 in the post-decision rally, pushing above $62 to set another record high. Silver futures last traded at $62.20, up $1.03 or 1.67%.

The gold-silver ratio compressed to 68.39, approaching our target range of 62-65. Should the ratio reach this technical objective, it may signal a potential culmination of silver's current record-breaking advance.

Fed Policy and Market Dynamics

The Federal Reserve's widely anticipated quarter-point reduction lowered short real rates and removed a dollar headwind that had constrained bullion, helping to anchor a price floor. However, the committee's cautious forward guidance and dot plot projections limited expectations for further easing, capping immediate upside potential.

Capital Economics noted in their post-decision analysis: "We doubt that the Fed will cut again until after a new Chair replaces Jerome Powell in May." The approaching end of Powell's tenure may keep the board in a holding pattern until new leadership takes office, potentially making safe-haven assets like precious metals more attractive to investors during this transitional period.

Both metals benefited from U.S. dollar weakness, with the greenback declining 0.59% to 98.65. The dollar's post-decision decline reinforced the traditional inverse relationship between U.S. yields and gold prices.

Structural Support Factors

Strong official sector demand remained a crucial structural support. China added to its reserves for a 13th consecutive month, while central banks globally maintained their net-buyer stance. Steady ETF inflows and robust physical buying across Asia continued absorbing available supply, underpinning the rally in both metals.

Wishing you as always good trading,