Gold and silver prices pulled back on Monday as US Treasury yields climbed, adding pressure to precious metals ahead of a pivotal Federal Reserve meeting. Traders are closely watching this week’s policy decision for clues about the central bank’s interest-rate path in 2025 and beyond.
US bond yields moved higher in Monday trading, mirroring weakness across major global government bond markets. The rise comes as investors prepare for a series of Treasury auctions and await Wednesday’s Fed announcement, which could shift expectations for rate policy heading into 2026.
Higher interest rates generally weigh on gold and silver, which offer no yield and therefore become less attractive in a rising-rate environment.
Kevin Hassett—considered a top contender for the next Fed chair—said Monday that it would be “irresponsible” to outline a six-month interest-rate forecast. Speaking on CNBC, the White House National Economic Council director emphasized that monetary policy must continue to follow incoming economic data.
Despite the uncertainty, swap markets still reflect a more than 90% probability of a quarter-point cut when the Fed concludes its final policy meeting of the year.
Expectations for easier monetary policy have fueled an impressive rally in silver in recent weeks. The metal has more than doubled in price this year, far outperforming gold’s roughly 60% surge.
Silver is also feeling the impact of a historic short squeeze. One-month lease rates—the annualized cost to borrow silver in London—remain elevated around 6%, even after a record inflow of physical metal into the world’s largest silver-trading hub. Those inflows have tightened inventories elsewhere, leaving Shanghai stockpiles near decade-low levels.
Bloomberg strategists note that this week could bring heightened volatility in silver as the market digests the Fed’s decision and ongoing supply constraints. While a rate cut could help sustain silver’s strong momentum, heavy bullish positioning could also expose the market to sharper price swings.
Options activity in Comex silver futures has surged as traders brace for wider moves and potential further gains. Retail interest has increased sharply as well, with trading volume in micro futures nearing its highest level since October, according to CME Group data.
Meanwhile, China’s central bank reported its 13th consecutive month of gold reserve accumulation, bringing its holdings to approximately 74.12 million troy ounces—another supportive factor for bullion.
As of 10:44 a.m. in New York, silver slipped 0.5% to $58.05 an ounce, while gold dipped 0.3%. Platinum and palladium edged higher, and the Bloomberg Dollar Spot Index gained 0.2%.
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