Silver Surges to Record High, Gold Gains as Stronger US Data Boosts Rate-Cut Expectations

Precious metals surged in early trading as silver reached a record peak of $35.10 per ounce, marking its highest level since records began, while gold rose to $2,418.50 per ounce amid stronger-than-expected US economic indicators. The rally was triggered by data showing December non-farm payrolls increased by 235,000, well above the forecasted 180,000, and the unemployment rate held steady at 4.1%. These figures suggested resilient labor markets despite persistent inflationary pressures, prompting investors to reassess the timing of potential rate cuts. The revised data led to a shift in expectations for the Federal Reserve’s monetary policy path. Futures markets now price in a 68% probability of a rate cut in March 2026, up from 52% at the start of the week. This reflects growing belief that the Fed may act sooner to counteract potential economic overheating, especially as core PCE inflation remains elevated at 2.9% year-on-year. Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like gold and silver, making them more attractive relative to fixed-income instruments. Market impact has been broad-based. The XAU/USD spot price closed up 1.7%, while XAG/USD gained 2.9%, outperforming major equity indices. US Treasury yields reversed earlier gains, with the 10-year note yield dropping 8 basis points to 4.62%. Currency markets also reacted, with the dollar index weakening to 103.45, reflecting lower demand for USD-denominated assets amid expectations of looser monetary policy.