Fed Cuts Rates as Economy Stalls – Gold Holds, Silver Surges

The Federal Reserve has followed through with a rate cut in the US, lowering the cost of borrowing in a bid to support a slowing economy. While rate cuts can often provide a boost to growth and encourage lending, the decision comes against a backdrop of mixed signals. Employment figures remain under pressure, showing that the jobs market is not as resilient as previously thought, while inflation risks linger in the background. Policymakers are hoping the cut will ease financial conditions without reigniting inflationary pressures, though it remains a delicate balance to strike.

Markets are already reacting. Gold continues to hold firm at elevated levels, reflecting both ongoing investor caution and the appeal of the metal in an environment where lower rates reduce the opportunity cost of holding non-yielding assets. Silver, often seen as both an industrial and a precious metal, has jumped more strongly, benefitting from safe-haven interest while also responding to expectations of improved industrial demand if the Fed’s actions succeed in stabilising growth.

For now, the rate cut is a clear signal that the Fed is prioritising support for a depressed economy and labour market, but investors remain wary. If inflation begins to accelerate again, the central bank may find itself forced back into a more defensive position. Until then, gold and silver are likely to remain in the spotlight as investors hedge against uncertainty.