Gold and Silver Slip Ahead of 'Tight' Fed and US-China Trade Talks
Wednesday, 5/07/2025 16:10
GOLD PRICES steadied back below $3400 and silver slipped again through $33 per Troy ounce on Wednesday ahead of US central bank the Federal Reserve making its first interest-rate decision since President Trump imposed steep trade tariffs on foreign imports, hitting China most of all.
China's central bank this morning announced 7 separate moves to loosen its monetary policy, cutting a key interest rate, easing commercial banks' reserve requirements, and raising its own direct lending to rural as well as hi-tech businesses ahead of Beijing's trade officials meeting with their US counterparts in Switzerland to discuss tariffs later this week.
Down 3.2% from last month's record high of $3500 per Troy ounce, gold bullion today traded 2.0% above its level on 2nd April when Trump imposed 125% tariffs on China in his
'Liberation Day' announcement − a move then matched by Beijing.
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industrially-useful silver in contrast held over $1 per ounce below its 2nd April price, but has rebounded by more than 15.3% from the sudden 7-month lows hit a week later as global stock markets and industrial commodities also sank.
Violence meantime worsened in Kashmir between nuclear powers Pakistan and India, while Russia and Ukraine continued military strikes ahead of tonight's 3-day ceasefire − unilaterally declared by Moscow − to mark the 80th anniversary of Nazi Germany's defeat.
"The global economy is full of uncertainties, with intensified economic fragmentation and trade tensions disrupting global industry and supply chains," said People's Bank of China chief Pan Gongsheng today, calling the new monetary policy settings "moderately loose".
With
Trump demanding that the Fed cut borrowing costs amid last month's trade-tariff turmoil, US Fed interest rates have run more than 1.6 percentage points above core CPI inflation over the last year, close to the highest real rate since early 2008.
Betting on today's decision now puts a 99.0% certainty on 'no change' according to the
CME derivative exchange's FedWatch tool.
That consensus has jumped from 61.5% this time last month, when commodity prices crashed with US stock markets following President Trump's 'Liberation Day' trade-tariffs shock.
June's Fed decision will also bring 'no change' according to 69.4% of Fed Funds futures contracts prices, the CME data says, leaping from just 0.8% a month ago and 32.9% this time last week.
July shall, finally, bring the 4th rate cut of this cycle − starting last September, and with gold and silver prices since gaining 31.7% and 6.6% respectively − according to 75.1% of CME Fed Funds futures for that meeting at today's prices, but that consensus has still shrunk from 99.9% this time last month.
Today's decision was unanimously seen cutting rates to 4.25% or lower as recently as the start of October, one month prior to Trump's victory in Election 2024.
Pakistan and India today continued to exchange fire across the Line of Control in the disputed region of Kashmir, with
both sides reporting dozens of civilians killed as Islamabad told its armed forces to respond in kind to New Delhi's Operation Sindoor, launched following last month's Pahalgam terror attack.
Military strikes by both Russia and Ukraine also continued with just hours until Moscow's Victory Day ceasefire was due to begin, when 29 heads of state will join President Putin to watch Thursday's military parade in Moscow.
Reports from Gaza meantime said
Israeli airstrikes today killed more than 60 people as the United Nations' Relief and Works agency for Palestine urged Israel to "lift the siege" blocking aid shipments and "stop this humanitarian catastrophe from reaching a new unseen level."
On the eve of Hamas' 7th October atrocities across southern Israel in 2023, gold priced in Dollars was trading dead-flat for the year at $1819, but has since risen 86.0%.
Silver prices have also risen sharply since those deadly attacks, adding 54.3% to hit a series of multi-year highs in all currencies last month.
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