Market Highlights and Key Data Macro Perspective During the week of December 12, 2025, the Federal Reserve cut interest rates by 25 basis points, lowering the federal funds rate target range to 3.50%–3.75%. This marks the Fed's third rate cut of the year, following reductions on September 17 and October 29, each by 25 basis points. The vote was 9 in favor and 3 against, with some members advocating for unchanged rates or larger cuts. The meeting statement noted moderate economic expansion, slowing job growth, a slight rise in unemployment, and persistently high inflation, with the committee closely monitoring risks to its dual mandate. Additionally, to maintain sufficient banking system liquidity, the Fed initiated a monthly short-term Treasury purchase plan of approximately $40 billion starting December 12, which may be perceived as a clear easing signal.

Fed Chair Powell stated in the press conference that monetary policy is not on a preset path and decisions will be data-dependent. While inflation remains elevated, core inflation excluding tariffs has improved significantly. Without new tariffs, goods inflation is expected to peak in Q1 2026. Interest rates are now at the upper end of the neutral range, with policy transitioning from restrictive to neutral. To ease market pressures, short-term Treasury purchases will remain elevated in the coming months, with completion expected by April 15, 2026. The economic outlook remains solid, supported by the end of the government shutdown, boosting 2026 growth expectations. President Trump reiterated criticism of Powell, arguing the rate cut was too small and should have been doubled.

Fundamentals For the week of December 12, 2025, SHFE gold warehouse receipts stood at 91,302 kg, up 3 kg from the previous week, while silver receipts rose by 132,965 kg to 820,921 kg. COMEX gold inventories fell by 342,923.18 oz to 35,967,752.07 oz, and silver inventories dropped by 3,710,865.74 oz to 453,359,774.03 oz.

In precious metals ETFs, the SPDR Gold ETF holdings were 1,053.12 metric tons, and the SLV Silver ETF holdings were 16,103 metric tons as of December 12. CFTC data as of November 18, 2025, showed gold speculative net long positions at 96,685 contracts and silver net long positions at 20,933 contracts.

During the same week, the CSI 300 Index fell 0.08%, while the electronics sector (linked to precious metals) rose 3.59%, and the solar sector gained 1.19%.

Strategy Gold: Cautiously Bullish Gold’s price action remains tied to U.S. monetary policy expectations. Beyond the anticipated December rate cut, the $40 billion monthly Treasury purchase plan may fuel expectations of further easing, potentially driving another rally. Gold’s underperformance relative to silver suggests room for the gold/silver ratio to rise, with prices likely to remain firm.

Silver: Cautiously Bullish Silver prices have surged to record highs. Given its higher volatility, buying on dips for hedging remains viable, but strict position control and stop-loss discipline are critical.

Arbitrage: Buy Gold/Silver Ratio on Dips Options: Pause

Risks Overseas Liquidity Shocks