Silver climbs to record high, gold poised for weekly gain on rate cut bets
NEW YORK (December 19) Silver soared to a record high on Friday, bolstered by investment demand and a supply tightness, while gold eyed a weekly gain, buoyed by increasing expectations of interest rate cuts by the U.S. Federal Reserve.
Spot silver added 2.3% to $66.96 an ounce, set to end the week 8.1% higher after hitting a record high of $67.20 in the session.
Spot gold rose 0.3% to $4,346.69 an ounce as of 11:38 a.m. ET (1638 GMT), and was set to log a weekly gain of over 1%. U.S. gold futures gained 0.4% to $4,380.
"(Gold and silver) are highly correlated and typically gold leads but the last two months, we saw silver lead. So, whenever you see spread that wide, people will start to pick on gold and tighten on it in the short term," said Michael Matousek, head trader at U.S. Global Investors.
Silver has soared 132% this year, far outpacing gold's 65% rise, driven by robust investment demand and supply constraints.
"ETF flows (in silver) continue to dominate that theme as well as some speculation from the retail investor," said Phillip Streible, chief market strategist at Blue Line Futures.
Macro data has further fueled optimism for rate cuts with U.S. consumer prices rising 2.7% year-on-year in November, falling short of economists' forecast of a 3.1% increase.
Separately, the U.S. Labor Department reported earlier this week that the unemployment rate rose to 4.6% in November, the highest since September 2021.
"We've seen the lower inflation data, the weakening labor report. It really reaffirms that the Federal Reserve should keep on their easing path – that's one of the main drivers. Second is a lot of the uncertainty around what central bank policy is going to entail," Streible added.
Traders continued to bet on at least two 25-basis-point interest rate cuts next year from the Fed, according to LSEG data.
Platinum added 3.2% to $1,977.85 after touching a more than 17-year high on Thursday. Palladium was 0.4% up at $1,701.75 after hitting a nearly three-year high earlier in the session. Both metals were set for weekly gains.
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