Both gold (XAUUSD) and silver (XAGUSD) rallied to new all-time highs on Friday amid rising geopolitical tensions and rate cut odds. Gold and silver are viewed as safe-haven assets and tend to perform well during times of geopolitical uncertainty.
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On Thursday, the U.S. launched strikes against Islamic State members in Nigeria, while the Trump administration’s blockade on sanctioned oil tankers leaving and entering Venezuela continues to be in effect.
“I have previously warned these Terrorists that if they did not stop the slaughtering of Christians, there would be hell to pay, and tonight, there was,” Trump said in a Truth Social post.
How Do Lower Rates Affect Gold and Silver?
The Fed will announce its interest rate decision on January 28, 2026, and while the odds of a rate cut are low, they have been steadily growing in recent days and currently stand at 17.7% on CME’s FedWatch tool.
“Prospect of lower U.S. interest rates is still supporting demand for gold and silver, lifting both metals to new record highs,” said UBS analyst Giovanni Staunovo.
Lower rates benefit the two metals because they don’t pay out interest. In other words, lower rates make gold and silver more attractive compared to interest-bearing assets, as the opportunity cost of holding the metals falls.
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