The Fed's decision last week to leave interest rates unchanged due to persistently stubborn inflation reaffirmed their 'higher for longer' stance. Following past Fed meetings where rates were not cut, gold and silver typically traded flat or slightly down on the announcements. Market analysts generally agree that metal prices will increase once rate cuts are announced, and we begin to see a weakening US dollar.

The US dollar is trading about 10% above its 10-year moving average. The strength of the dollar has a high correlation with gold prices; therefore, a weakening dollar should be positive for gold and other commodities.

Longer term, continued inflation, although detrimental to consumer savings, benefits gold. Gold has responded well to the inflation we've experienced over the past three to four years, albeit with a lag effect (it can take three to six months for gold to adjust to inflationary effects).

Gold and silver experienced a bump following the news of renewed fighting in Gaza, where Israeli forces launched an offensive into Rafah, despite Hamas agreeing to a ceasefire deal just hours earlier. Gold is up 25% since the Hamas attacks on October 7th. The outcome of the Palestinian conflict may significantly impact the overall geopolitical landscape and risk sentiment.

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