Commodities wrap: gold, silver, and oil prices rise ahead of key economic events

Gold extended its rally on Tuesday, climbing to yet another record high as expectations built around a US Federal Reserve rate cut later this month.

Silver prices also remained near 14-year highs on Tuesday as institutional demand for the metal increased. 

Oil prices were similarly in the green ahead of a closely watched OPEC+ ministerial meeting scheduled for later this week.

Gold hits record highs

Recent uncertainty surrounding the standoff between US President Donald Trump and the Federal Reserve has increased demand for the yellow metal. 

Additionally, traders are currently assigning a 90% probability to a 25-basis-point Fed rate cut on September 17, according to the CME FedWatch tool. 

Gold, a non-yielding asset, typically thrives in environments with low interest rates. 

At the time of writing, the December gold contract was up 1.7% at $3,578 an ounce. 

According to Commerzbank AG, the recent rally in gold prices is unlikely to have been driven by the short-term US interest rate outlook, which has only changed marginally in recent days.

“In fact, the markets appeared to react more strongly to the comments made by Fed Chair Powell at the Jackson Hole central bankers’ symposium than to Cook’s dismissal,” Thu Lan Nguyen, head of FX and commodities research at Commerzbank, said in a report.

Investors anticipate the US nonfarm payrolls data, expected on Friday, to gauge the extent of the Federal Reserve's projected interest rate cut later this month.

Silver outshines gold

Silver prices exceeded $41 per ounce on Monday, a level not seen since 2011.

At the time of writing, the December silver contract was up 1.8% at $41.435 per ounce.   

The rallies in both silver and gold are currently being driven by increasing anticipation of interest rate cuts by the US Fed. 

The upcoming US jobs report this Friday will be a key market focus, as it is expected to confirm a softening labour market, thereby reinforcing the argument for these cuts. 

The next policy meeting is just three weeks away.

Silver continues to outshine gold, with the gold/silver ratio currently at 85. This is a decrease from its peak of 104.7 on April 24, indicating silver's strong performance.

“This brings the ratio closer to its long-term average,” analysts at ING Group said in a note. 

Silver holdings in ETFs have risen for a seventh consecutive month, reaching 806 million ounces in August.

This surge coincides with a more than 40% rally in silver prices this year.

This is the longest run of inflows since 2020, according to ING Group. 

Meanwhile, platinum and palladium prices rose 2.4% each on Tuesday.  

Oil prices rise

Brent crude oil prices on the Intercontinental Exchange breached the $69 per barrel mark on Tuesday for the first time in nearly a month ahead of the OPEC+ meeting later this weekend. 

“We believe, just like the broader market, that the group (OPEC+) will leave production levels unchanged for October,” ING analysts said. 

This development comes after OPEC+ gradually reversed its 2.2 million barrels per day in additional voluntary supply cuts over the past six months.

ING analysts said:

“The bigger risk is OPEC+ deciding to reinstate supply cuts, given concerns about a surplus,” they added. 

At the time of writing, the price of West Texas Intermediate crude oil on the New York Mercantile Exchange was at $64.86 a barrel, up 1.3%. Brent crude oil was up 0.4% at $68.40 a barrel.