The cooling of US inflation boosts interest rate cuts, and gold, silver, and platinum are expected to remain high

The Zhitong Finance App learned that since the growth rate of US inflation data was lower than expected and market interest rate cuts were heating up, gold and silver prices hovered near historical highs on Friday, and platinum was also close to its peak in 17 years.

According to the data, the price of spot gold hovered around 4,325 US dollars per ounce, with a weekly increase of 0.6%. It is expected to rise for the second week in a row. Gold hit an all-time high of 4,381 US dollars per ounce in October. The price of silver was $64.99 per ounce, close to the all-time high of $66.89 per ounce set this Wednesday. At one point, platinum rose 1%, while palladium rose at the same time. The US dollar spot index was flat.

According to data released on Thursday, the year-on-year increase in the US core consumer price index (CPI) fell to its lowest level since the beginning of 2021, which further strengthened market expectations for interest rate cuts. For precious metals that do not generate interest, the reduction in borrowing costs is certainly a major positive factor.

However, the record six-week government shutdown, which only ended last month, greatly reduced the reference value of this latest inflation report. After the Federal Reserve finished cutting interest rates for the third time in a row in the year last week, its statement on the future pace of monetary easing remains ambiguous. Traders currently expect that the probability that the Federal Reserve will cut interest rates in January next year is about 25%, while US President Trump is calling for a sharp reduction in interest rates next year.

Geopolitical tension has also increased the safe-haven appeal of gold. This week, the situation in Venezuela continued to escalate. The Trump administration ordered the blockade of all sanctioned oil tankers, while increasing military deployment in the region, putting pressure on the Venezuelan government to further support the rise in gold prices.

The precious metals sector experienced a sharp rise this year, and both gold and silver are expected to record their best annual performance since 1979. With the dual support of major central banks continuing to buy large amounts of money and the inflow of gold ETF funds, the price of silver has more than doubled during the year, and the increase of gold has reached about two-thirds.

A team of Goldman Sachs analysts led by Daan Struyven stated in the report: “The decline in US interest rates is prompting ETF investors to start competing with major central banks for a limited supply of gold. We expect that the two core driving forces of high structural demand from the central bank and cyclical support brought about by the Federal Reserve's interest rate cuts will continue to drive the upward trend in gold prices.”

At the same time, the price of platinum has been rising for seven consecutive trading days, and the increase also doubled during the year, breaking through 1980 US dollars per ounce, a new high since 2008. The London platinum market showed signs of tightening supply, and a number of banks transferred platinum stocks to the US to avoid tariff risks. Furthermore, with the listing and trading of platinum futures in Guangzhou, demand in the Chinese market picked up, and platinum exports to China showed strong performance this year.