Gold, silver rally as Fed’s Waller cuts September hike odds - Kitco PM Report - KITCO

This isn't just a rally; it's the market finally acknowledging the writing on the wall. When a known hawk like Fed Governor Waller starts talking about cutting September hike odds, it's not a subtle hint. It's a flashing neon sign that the Fed's tightening cycle is nearing its end, if not already over. This isn't about one meeting; it's about the entire trajectory. For your stack, it means the purchasing power of physical metal is about to get a serious boost as the dollar's strength inevitably wanes with easing monetary policy.

Gold reacted exactly as it should, vaulting over $50 on the day to close around $4580.0 an oz, a move of approximately 1.15%. Silver, true to form, amplified that move, climbing over $1.80 to touch $69.40 an oz, a gain of roughly 2.72%. This kind of decisive move, particularly from a single Fed official's comments, hasn't been seen with such clarity since early 2020 when initial pandemic fears truly kicked off the most recent leg up. The message is clear: lower interest rate expectations mean lower real rates, which directly undermines the dollar and makes zero-yielding assets like gold and silver far more attractive to institutional money.

What Waller is signalling is a crucial pivot. He stated the Fed could "do nothing" in September, suggesting a holding pattern. This isn't just about pausing; it's about setting the stage for rate cuts, even if the Fed won't admit it yet. The market is forward-looking. When the probability of higher rates diminishes, the cost of holding physical precious metals, relative to interest-bearing assets, falls. This directly impacts demand for spot and, more importantly, feeds into the physical market by making gold and silver a more compelling store of value against an inevitable return to looser monetary conditions.

The COMEX futures market saw significant short covering on the news, pushing prices higher rapidly. But the real story is the underlying fundamental shift. For years, the Fed has been artificially propping up the dollar and suppressing precious metals through hawkish rhetoric and rate hikes. Now, with inflation persistent and economic growth slowing, their options are narrowing. Waller's comments are an acknowledgment of this reality. This isn't just a temporary bump; it's the beginning of a re-rating of what gold and silver truly represent in a world facing increasingly dovish central bank policy. Premiums on physical may soon reflect this renewed institutional and retail interest.

Keep an eye on the upcoming CPI data; any hint of cooling inflation will only cement the Fed's dovish pivot and send your stack higher.