Gold and silver prices surged, with some base metals also showing upward movement, as markets responded to the latest Federal Reserve rate cuts and the end of the central bank’s deflationary policies.
Gold reached $4,475 per ounce, a significant increase from just $20 when the Federal Reserve was established. The gold standard was abandoned in 1971 following the Fed’s full-employment policy initiatives. While monetary policy saw improvements through the 1980s and 1990s, the central bank began expanding the money supply from 2001 onwards, in response to calls from macro-economists for reflation.
The Federal Reserve is currently operating under an abundant reserve regime, utilizing a floor system and open market operations. This approach limits the Fed’s control over reserve money once quantitative tightening is halted.
Over the past 30 days, gold prices have risen from around $4,100 to the $4,450–$4,475 range. Silver prices have also climbed, reaching approximately $72 per ounce, up from $69. Copper, a key base metal, increased by about 10 percent to $5.58 per pound.
It remains uncertain whether food and energy commodities will follow this trend. If they do, it could pose additional challenges for central banks attempting to contain inflation. In recent years, traditional price ratios between precious metals and energy commodities have shown a notable disconnect.
(Colombo/Dec24/2025)
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