⏫Silver and gold rally ahead of FOMC minutes

With two hours of trading remaining on Wall Street, a pronounced rebound is underway across the precious metals complex, alongside a recovery in industrial metals. This marks a sharp reversal in sentiment following yesterday’s aggressive sell-off, which was triggered by fears over hiked margin requirements on COMEX. The current return to growth suggests that investors are positioning themselves for today’s publication of the minutes from the most recent Federal Reserve meeting.

Key context of the December Fed decision:

• A lack of unanimity: Although the Fed cut rates by 25 basis points on December 10 as anticipated, the decision was not unanimous, signaling growing internal resistance within the committee.

• Labour market as a catalyst: Investors are betting that the minutes will confirm Jerome Powell’s expressed concerns regarding labour market conditions, potentially justifying faster and deeper rate cuts than were projected mid-year.

The tone of the official statement and subsequent press conference highlighted lingering inflationary risks, albeit with the caveat that tariff-related effects may be transitory. The Fed currently faces the challenge of fulfilling its dual mandate: tempering inflation while protecting the labour market. Should the minutes validate estimates suggesting that payroll growth has been over-reported by approximately 60,000, the market could receive a strong pro-growth impulse.

Potential market scenarios following the release:

• Dovish Scenario: If the record confirms that preserving employment is the priority, we expect continued dollar weakness alongside a rally in metals and equities, reversing losses from recent sessions.

• Hawkish Scenario: If the discussions reveal a prevailing view that the neutral rate has been reached, the US dollar may gain strength, deepening the slide on Wall Street and renewing selling pressure on gold and silver.

The significance of today’s release is amplified by the visible rift within the FOMC. While press conferences primarily feature the Chairman’s perspective, the minutes will reveal the difficulty of achieving a consensus. Additional uncertainty stems from the imminent leadership transition; the successor to the Fed chair is expected to be announced in early 2026, and Jerome Powell’s future status as a governor remains unclear.

Strategic takeaways for the metals market:

• Monetary policy over geopolitics: While physical fundamentals support bullion, the Fed’s pivot in August was the primary engine of the bull market.

• Deceleration risk: An early conclusion to the Fed’s easing cycle could act as the primary barrier limiting price appreciation for silver and gold in 2026.

Technical Outlook

Silver is surging by more than 5% today, returning to the $76 per ounce level and testing roughly the midpoint of yesterday’s bearish candle. Furthermore, the price has breached the 23.6% Fibonacci retracement of the latest upward wave. Should silver remain above this threshold following the minutes, the bullish outlook remains intact. Conversely, a prominent wick on the daily candle would suggest a return to a deeper correction.

Gold is underperforming relative to silver today, facing resistance at the 23.6% retracement level. Nevertheless, the demand zone situated between the 25 and 50 SMAs, as well as the $4,300 level, has been maintained. However, the widening gap between these moving averages suggests that short-term overvaluation remains a possibility.