The Federal Reserve’s 25-basis-point interest rate cut this week is almost a certainty, with the market expecting an 87.4% chance of a rate cut. The US dollar strengthened as US labor market data exceeded expectations, while gold prices rose with market bets on a rate cut, with spot silver breaking through $60 per ounce to reach a historic high.
On Tuesday, December 9th, data from the US Department of Labor showed that US job vacancies in October rose modestly to 7.67 million, higher than the expected 7.15 million, indicating that the labor market remains resilient.
The better-than-expected employment data fueled the strength of the US dollar. The US Dollar Index, which measures the dollar against six major currencies, edged up 0.1% to 99.21. The USD also reached a two-week high against the Japanese yen at 156.845.
Precious metals market showed significant strength, with spot silver prices soaring by 4.3% to a historic high of $60.74 per ounce. Gold prices also rose by 0.6% to $4,211.77 per ounce. Gold futures for February delivery in the US rose by 0.4% to $4,236.2.
Other precious metals also saw strong gains, with platinum rising by 2.8% to $1,688.39 per ounce and palladium up by 2.6% to $1,503.74 per ounce.
The record-breaking silver prices are driven not only by monetary policy but also by strong industrial demand and supply shortages.
The Silver Institute stated in a research report that industrial demand for silver will continue to grow until 2030 in areas such as solar energy, electric vehicles, infrastructure, data centers, and artificial intelligence (AI).
Maria Smirnova, Chief Investment Officer at Sprott Asset Management, said that unless supply shortages improve, “silver only has one way to go – up.”
Bob Haberkorn, Senior Market Strategist at RJO Futures, forecasted that silver prices could surpass $70 per ounce in the first half of 2026, while gold could aim for $5,000 per ounce.
On Tuesday, major Wall Street stock indexes closed mixed, near the flatline.
Although the market has largely priced in the rate cut, strategists cautioned that Federal Reserve policymakers may emphasize inflation risks at the meeting, which could limit further easing measures and try to set a relatively high threshold for the next rate cut.
The market is closely watching the latest dot plot from Fed officials to assess the extent of dissent among decision-makers. Investors are also starting to lower their rate cut expectations for 2026, and there are doubts about whether the popular candidate Kevin Hassett, who is expected to succeed current Chair Powell, will be as dovish.
While the US continues on its path towards rate cuts, the divergence in global central bank monetary policies is intensifying. The Reserve Bank of Australia (RBA) has kept interest rates unchanged at 3.6% for the third consecutive month and publicly ruled out further rate cuts, leading to a 0.3% increase in the Australian dollar.
European Central Bank (ECB) committee members indicated that the ECB’s next move might be a rate hike rather than a cut, but they also emphasized that this would not happen in the near term, causing the euro to fall by 0.1% against the US dollar to 1.1629.
In addition, the cryptocurrency market also saw some positive performances, with Bitcoin rising by 2.6% to $93,704.38 and Ethereum up by 6.4% to $3,350.32.