Gold prices rose Friday but remained on track for a weekly decline of 1–2%, pressured by the Federal Reserve’s more hawkish outlook on interest rates.
The Fed’s updated projections show fewer rate cuts through 2025 than previously expected, with officials now forecasting two quarter-point cuts rather than the four signaled in September.
As markets absorb that hawkish shift, political uncertainty from Washington is adding to the pressure on markets.
US Government Faces Shutdown Over Funding Bill
Another government shutdown is possible after House members rejected a short-term funding measure Thursday evening, voting 174–235 against the bill despite former President Trump’s endorsement. House Republicans now face a tight deadline to draft and approve new legislation before Friday.
What once was considered politically taboo has become a recurring tactic in modern Washington, where shutdown threats are regularly used as leverage in budget negotiations.
Fed’s Preferred Inflation Gauge Shows Mixed Signals in November
The Personal Consumption Expenditures (PCE) price index rose 0.1% in November, below expectations, while the annual rate ticked up to 2.4% from October’s 2.3%—still above the Fed’s 2% target.
Core PCE, which excludes food and energy, remained at 2.8% year-over-year. Both measures came in below some forecasts but indicate persistent underlying inflation despite aggressive monetary tightening.
While the Fed favors the PCE for its broader scope—covering areas like healthcare and indirect consumption—it can understate the price pressures consumers feel day to day. The Consumer Price Index (CPI), which captures out-of-pocket expenses, typically runs about 0.3–0.4 percentage points higher than PCE for core measures and often better reflects household cost burdens.
Despite the modest monthly increase in November, Fed officials remain cautious about declaring victory over inflation and project that price pressures could persist above target well into 2025.
Looking ahead to the precious metals market in the year ahead, analysts highlight divergent prospects for silver and gold.
Saxo Bank Predicts Silver Will Outshine Gold in 2025
Saxo Bank’s recent report highlights silver’s potential to outperform gold next year, noting silver’s dual role as both a precious and industrial metal.
The bank points to silver’s strong showing in 2024, driven by rising demand from renewable energy and electronics sectors combined with ongoing supply deficits. Those industrial drivers could support higher silver prices even if macroeconomic uncertainty keeps both metals correlated.
Given persistent inflation, political risks, and improving fundamentals for industrial metals, investors may find silver particularly attractive as part of a diversified precious metals allocation.
GoldSilver emphasizes the ease of adding precious metals to a portfolio, noting that accounts can be opened quickly and that precious metals can serve to protect purchasing power over time.
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