Commodity wrap: silver hits record high, gold rises after divided Fed rate cut; oil prices fall

Gold prices were slightly higher on Thursday after the US Federal Reserve cut interest rates.

Meanwhile, silver prices continued to rally with the metal hitting a fresh record high on COMEX, buoyed by lower interest rates and a supply crunch.

Oil prices were in the red with investors focusing on peace talks between Russia and Ukraine.

Gold slightly higher

Gold prices increased following a divided vote by the US Federal Reserve on a proposal to cut interest rates by a quarter of a percentage point, which traders were assessing.

In a split decision, the Federal Reserve reduced interest rates by 25 basis points on Wednesday.

However, the central bank indicated it would likely halt further rate cuts to evaluate the trajectory of the job market and inflation, which officials noted “remains somewhat elevated.”

Six policymakers indicated their opposition to the cut, suggesting the benchmark federal funds rate should be between 3.75% and 4% at the close of 2025.

This view was echoed by a larger faction of regional Fed bank presidents who also signaled their disapproval of the reduction.

Neil Welsh, head of metals at FCA-regulated multi-asset brokerage Britannia Global Markets, said:

The divisions could foreshadow challenges for a new chair in 2026, with many policymakers willing to make clear their opposition through “silent” and formal dissents, making it hard to corral the Federal Open Market Committee.

Following their two-day meeting, most policymakers indicated through their projections that they foresee only one rate cut in 2026. Fed Chair Jerome Powell did not provide any hint as to the timing of a subsequent cut.

Meanwhile, US President Donald Trump commented on Wednesday, suggesting the Fed’s rate cut could have been more substantial.

Trump is expected to name the new Fed chair early next year, with White House economic adviser Kevin Hassett considered a leading candidate.

At the time of writing, the COMEX gold contract was at $4,290.70 per ounce, up 1.6%.

Silver hits record high

The March silver contract on COMEX was at $63.965 per ounce, up 4.9% from the previous close.

The contract had hit a fresh record high of $64.018 per ounce earlier in the day.

Silver’s value has more than doubled since the beginning of the year, reaching a new record high.

Welsh said:

A mix of forces is boosting the precious metal, including the weakened dollar, tariff concerns, and a long-running silver shortage, with industrial demand and investment demand also contributing to its soaring popularity.

Among other metals, copper prices on the London Metal Exchange were nearing a record high, with prices nearly 1% higher on Thursday.

The price of the red metal has climbed more than 30% this year.

This surge is also being fueled by several factors: multiple mine disruptions, concerns about supply shortages outside the US, and traders rapidly shipping supplies into the US ahead of potential tariffs next year.

“Rising demand for the renewable energy sector is underpinning demand for the red metal over the longer term,” Welsh said.

Oil falls over 1%

Investors turned their attention to the Russia-Ukraine peace negotiations and the potential repercussions of a US seizure of a sanctioned oil tanker near Venezuela’s coast, causing oil prices to decline on Thursday.

US envoy Steve Witkoff’s visit to Moscow this month successfully cleared up misunderstandings between the two countries, Russian Foreign Minister Sergei Lavrov stated on Thursday.

Moscow submitted its proposals on collective security guarantees to Washington, he added.

A day earlier, benchmarks closed higher following the US seizure of an oil tanker off Venezuela’s coast. This action escalated tensions between the two nations, sparking worries about potential supply disruptions.

Trump announced on Wednesday the seizure of a massive tanker—described as the “largest one ever”—off the Venezuelan coast, adding that “other things are happening.”

The seizure of an unnamed vessel, which British maritime risk management group Vanguard identified as the tanker Skipper, reportedly occurred off the coast of Venezuela.

Asian buyers are currently demanding substantial discounts on Venezuelan crude oil. This is due to several factors: an increased supply of sanctioned oil from Russia and Iran, and elevated loading risks in Venezuela as the US strengthens its military presence in the Caribbean.

Meanwhile, investor attention was predominantly focused on developments surrounding the Russia-Ukraine peace talks.

The leaders of Britain, France, and Germany engaged in a discussion with President Trump concerning Washington’s latest peace initiatives to end the conflict in Ukraine, characterizing the moment as “critical” to the process.

At the time of writing, the price of West Texas Intermediate crude oil was at $57.78 per barrel, down 1.1%, while Brent was at $61.52 per barrel, also down 1.1%.

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