Precious metals surge to fresh highs as Fed cuts add fuel

Key Points:

• Gold, silver, and platinum have continued their rapid ascent following last week’s widely anticipated FOMC rate cut, with the breadth and speed of the rally raising questions about its near-term sustainability
• Gold has met its technical objective derived from its September 1 breakout following the month-long consolidation
• Silver has outperformed even gold in percentage terms, surging 50% year-to-date to a 14-year high
• Platinum, often overshadowed by its peers, has re-established itself, and following a brief pause has shot higher to record a year-to-date gain of 67%
• Despite the supportive backdrop, near-term risks should not be ignored. Technical indicators such as daily RSI readings are stretched, raising the risk of a healthy correction within the prevailing uptrend

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Gold, silver, and platinum have continued their rapid ascent following last week’s widely anticipated FOMC rate cut, a move that initially sparked some profit-taking but has since unleashed renewed demand. The breadth and speed of the rally raise questions about its near-term sustainability, yet several factors beyond simple momentum and fear of missing out explain why investment metals remain in such strong demand.
 

Gold at new records

Gold has broken through to a fresh record near USD 3,800, effectively meeting a technical objective derived from its September 1 breakout after a month-long consolidation. The speed of the move underscores how shallow any corrections have been in recent weeks and months as dips continue to be met with fresh buying interest, a pattern consistent with broader macro support rather than speculative froth alone.

The year-to-date gain in gold now approaches 42%, putting the metal on track for its strongest annual rally since 1979, when a global energy crisis triggered inflationary shocks that reverberated through financial markets. The historical parallel highlights today’s backdrop of unease about U.S. fiscal sustainability, sticky inflation, and the potential erosion of central bank independence.

Silver outpaces gold

Silver has outperformed even gold in percentage terms, surging 50% on a total return basis to USD 44.46, a 14-year high. Its dual identity as both a monetary and industrial metal has worked to its advantage. On one hand, silver benefits as a high-beta expression of gold’s store-of-value appeal. On the other, structural demand growth from photovoltaics and electrification provides a more tangible narrative that helps anchor allocations.

In addition, the global silver market is experiencing a significant supply deficit in 2025, continuing a multi-year trend where demand has outpaced available supply. Recent industry analysis, including data from the World Silver Survey 2025 and the Silver Institute, show that the deficit this year is projected at roughly 10–15% of total annual demand, marking the fifth consecutive year of market shortfall, leading to a reduction in already mined, or above-ground stockpiles.

 

Platinum rejoins the rally

Platinum, often overshadowed by its peers, has re-established itself in dramatic fashion. Following almost a decade of sideways trading action, the metal sprung back to life in May after the World Platinum Investment Council reiterated their forecast for another annual supply deficit. Driven by South Africa’s constrained power grid reducing mining investment thereby limiting expectations for new supply growth, U.S. trade policies and tariff fears together with resurgent global and not least Chinese demand as investors returned to platinum after its widening discount to gold - the gold-platinum reach a record 3.54 on 21 April before declining to the current 2.56 level - prompted both professional and retail investors to recognise its fundamental undervaluation. In addition, even a modest pickup in ETF demand and not least improvements in automotive demand can have an outsized impact given the already tight supply outlook. 

Following a near 50% surge between May and July, a mild 0.382 fibonacci retracement took prices lower before surging again this past week, briefly climbing above USD 1,500 for the first time in 11 years and, and with a 67% year-to-date gain, it remains the best-performing major commodity of 2025.

 

Why the rally runs deeper than momentum

While the sheer pace of the post-FOMC rally may look stretched, there are several fundamental drivers at work:

Lower funding costs: With the Fed embarking on a second round of rate cuts, the cost of holding non-yielding assets has fallen. The path of further cuts matters as much as the initial move, anchoring expectations for continued support.

Easing real yields: Breakeven inflation remains sticky while nominal yields have drifted lower, producing softer real yields that mechanically lift the valuation anchor for gold and its high-beta peers.

Policy risk premium: Renewed debate around Fed independence and persistent U.S. fiscal deficits have introduced a policy credibility risk that markets are now pricing. This “insurance” bid helps explain why metals have gained even on days when the dollar has been firm.

Broadening flows: ETF demand has turned positive, with 2025 inflows already exceeding the combined outflows of the previous two years. In Asia, Shanghai premiums remain firm, underscoring robust physical appetite. Futures markets have shifted from short covering to fresh long build, broadening the rally’s base.

Risks of overextension

Despite the supportive backdrop, near-term risks should not be ignored. Technical indicators such as daily RSI readings are stretched, while options markets show a rich skew toward upside calls. That concentration leaves prices vulnerable to a hawkish policy surprise, easing geopolitical tensions or a sudden rebound in the dollar. If the latter is driven by a stock market correction and spiking volatility, a broad but temporary risk reduction phase like the one we saw in April may once again force an across the board reduction from leveraged funds.

With that in mind, speculative positioning is also a factor to watch. Especially those held by managed money accounts in the futures market and monitored weekly through the Commitment of Traders report. A period where new long builds exceeding short covering, the market could be more vulnerable to a drawdown on any macro shock.

From a technical standpoint, a 38.2% retracement of the post-FOMC leg would be considered a healthy correction within the prevailing uptrend. For gold, such a pullback would align with prior breakout levels, while silver and platinum would see similar proportional adjustments.

Longer-term outlook

Our strategic view on gold and other investment metals remains firmly bullish. The combination of lower real yields, a softer dollar, and growing political risks in the U.S. continues to underpin allocations. ETF inflows underscore renewed investor appetite, while persistent physical demand in Asia and from central banks provide additional ballast.

A potential headwind could emerge from a slowdown in central bank buying as the market value of their existing reserves rises relative to other assets, thereby reducing the need to grow holdings even further. However, the greater swing factor lies in Washington. Any erosion of Fed independence that unanchors inflation expectations or deepens concerns about U.S. fiscal credibility would likely extend the rally, pushing gold well beyond our near-term USD 4,000 target.

Conclusion

Precious metals are enjoying one of their strongest rallies in decades, underpinned not just by momentum but by structural drivers and macro risks that are difficult to dismiss. While short-term corrections are both likely and healthy, the broader forces at work suggest that gold, silver, and platinum remain central to the investment landscape as 2025 enters its final quarter.