The Federal Reserve's policy shift expectations ease, and the market tests the tug-of-war between bullish and bearish precious metals.

As the market focuses on the future direction of the Federal Reserve, the latest data from CME has sounded an alarm. According to the FedWatch tool, as of December 15, traders estimate only a 24.4% chance of the Fed cutting interest rates by January 28, 2026, with a 75.6% probability of holding rates steady. This data reflects that, despite long-term easing expectations, the market does not strongly anticipate a recent policy shift. This cooling of policy expectations is profoundly impacting the overall rhythm of the precious metals market.

Geopolitical Peace Signals and the Diminishing Need for Risk Hedging

The performance of international gold prices on December 15 fully illustrates this shift. Gold futures, which rose by 1% in the early session, ultimately closed with a slight gain of only 0.2%. COMEX February gold futures settled at $4,335.2 per ounce, nearly five times less than the initial gain. Spot gold was also reported at $4,305 per ounce.

The main driver behind this was positive signals from Russia-Ukraine conflict negotiations. U.S. Special Envoy Steve Wittekov stated that there had been “many progress” in negotiations with Ukraine, and Ukrainian negotiator Umerov confirmed on the 15th that the past two days of talks between Ukraine and the U.S. had been “constructive and effective,” achieving “tangible progress.” These statements from both sides of the conflict directly weakened market risk aversion sentiment. Senior market analysts pointed out that progress in Russia-Ukraine peace negotiations seems to be beginning to suppress gold’s appeal as a traditional safe-haven asset.

Traders’ Cautious Stance Amid Economic Data Release Windows

In addition to the marginal changes in geopolitics, the upcoming release of key U.S. economic data this week has traders caught in a dilemma over direction. Several important data points, delayed due to the U.S. government shutdown, will be released this week.

On Tuesday (December 16), the market will see the release of the November non-farm payrolls report and October retail sales data. According to survey forecasts, the expected increase in non-farm payrolls for November is only 50,000, a significant decline from 119,000 in September. This contrast is enough to influence market expectations regarding economic strength.

On Thursday (December 18), the November Consumer Price Index (CPI) will also be announced. Since these data directly relate to the Fed’s policy judgment, market participants generally choose to reduce directional bets and adopt a wait-and-see approach until the results are clear.

Divergent Trends Within the Precious Metals Sector

While gold’s gains are converging, the precious metals market shows a completely different picture. Silver, platinum, and palladium performed strongly, exhibiting independent trends.

On December 15, COMEX March silver futures rose by 2.6% to $63.589 per ounce, NYMEX January platinum futures increased by 3.0% to $1,815.9 per ounce, and NYMEX March palladium futures surged by 5.2% to $1,623.1 per ounce. This divergence highlights the complexity of the current market: gold’s role as a safe haven is temporarily suppressed due to hopes for peace, while other precious metals with industrial attributes may be supported by different fundamentals, such as industrial demand expectations or supply-side factors.

Differentiation in the Base Metals Market

The base metals sector is also experiencing divergence. Copper prices were boosted by the dollar’s depreciation, with the ICE Dollar Index (DXY), tracking the dollar against major currencies, falling 0.15% to 98.25 on the 15th. Driven by this, three-month copper on the London Metal Exchange (LME) rose 1.16% to $11,686 per ton, and March copper on NYMEX increased 1% to $5.4120 per pound.

However, other base metals generally faced downward pressure. Aluminum futures remained flat, while lead, zinc, and nickel all declined to varying degrees, with nickel dropping the most at 2.22%.

Multi-Dimensional Market Observation

Market observers like Jim Sturgess suggest that the current precious and base metals markets are at a critical balancing point. As key U.S. economic data approaches release and further signals emerge from geopolitical negotiations, this delicate balance is likely to be broken. The market will face a new round of direction selection and re-pricing. Traders need to closely monitor the tug-of-war between cooling policy expectations and easing geopolitical risks—how these forces will reshape the relative value of risk assets versus safe-haven assets.