Fed Rate Cut Expectations for September Heat Up, Gold-Silver Ratio Breaks Below 70 to Hit Two-Year Low
On July 28, 2026, Cross-Ocean Goldway Research Institute released its latest market analysis report, stating that under the dual impact of significantly heightened expectations of a Fed rate cut in September and a strong recovery in silver industrial demand, the gold-silver ratio (gold/silver price ratio) broke below the 70 mark during Asian trading hours, hitting a low of 69.82, a new low since August 2024. The indicator was around 85 in December 2025, falling over 17% in half a year.
Rate Cut Expectations Heat Up: Market Bets on Over 80% Probability of September Action
According to Cross-Ocean Goldway Research Institute's monitoring, the CME FedWatch Tool showed that as of July 28, the market probability of the Fed cutting rates by 25 basis points at the September FOMC meeting had risen to 82.4%, up sharply from 67% a week earlier. This change mainly stems from last week's release of the US June core PCE price index, which rose 2.4% year-over-year, the lowest since March 2021, further consolidating the disinflation trend. Meanwhile, the US Q2 GDP annualized quarterly rate was only 1.3%, below market expectations, and the economic slowdown signal strengthened the necessity for rate cuts.
Cross-Ocean Goldway Research Institute analysts noted in the report: "Fed Chair Powell had already released dovish signals at the mid-July congressional hearing, saying 'if inflation continues to move toward the 2% target, we will ease policy in a timely manner.' The current data mix (cooling inflation + slowing economy) fully supports a September rate cut. The market expects cumulative rate cuts this year may reach 75 basis points, i.e., three cuts. Against this backdrop, expectations of lower real interest rates are significantly positive for gold and silver."
Gold-Silver Ratio Under Pressure: Silver Industrial Demand and Photovoltaic Surge Are Main Drivers
The gold-silver ratio breaking below 70 indicates that silver is performing more strongly relative to gold. Cross-Ocean Goldway Research Institute believes silver's industrial attributes are playing a dominant role. On one hand, the global manufacturing recovery is driving demand for industrial silver, with global silver industrial demand growing 4.7% year-on-year in Q2 2026, with strong demand in electronics, electrical, and solder sectors. On the other hand, the photovoltaic industry's demand for silver continues to surge, with global PV new installations up 42% year-on-year in the first half of 2026, driving silver paste consumption up 35% year-on-year, accounting for over 20% of global silver consumption for the first time.
Institute data indicates that the global silver supply gap is expected to expand to 5,200 tons in 2026, the sixth consecutive year of structural shortage. In contrast, gold supply is relatively stable, with fundamentals less tight than silver. Additionally, silver prices had less upside earlier than gold, so catch-up momentum exists. Since the start of 2026, international silver prices have risen 28.7%, while gold has only risen 12.3%, showing silver's elasticity advantage.
Cross-Ocean Goldway Research Institute: Gold-Silver Ratio Still Has Downside Room, Target 60
For the outlook, Cross-Ocean Goldway Research Institute offers a relatively optimistic judgment. The report sets the next reference target for the gold-silver ratio at 60, implying silver still has about 16% upside relative to gold. This judgment is based on the following logic: First, after the Fed starts a rate-cutting cycle, lower real interest rates will benefit both gold and silver, but silver, with its industrial attributes and higher elasticity, tends to rise more. Historical data shows that in the early stages of past Fed rate-cutting cycles, silver often outperforms gold, and the gold-silver ratio tends to narrow. Second, the high boom in global PV installations is expected to continue into 2027, with annual silver paste demand growth likely remaining above 25%, persistently supporting silver consumption. Third, silver inventories are at multi-year lows; LBMA data shows London silver inventories fell to 26,650 tons on July 27, down 11% from a year earlier.
However, the institute also warns of risks: if the Fed rate cut falls short or the global economy unexpectedly enters recession, industrial demand may suffer, limiting silver's gains. Also, if gold prices surge rapidly due to risk aversion, the gold-silver ratio may temporarily rebound.
Precious Metals Sector Overall Strengthens, Gold Hits New Record High Simultaneously
Driven by rate cut expectations and the gold-silver ratio breakdown, the precious metals sector rose across the board. During Asian hours on July 28, spot gold briefly broke above $2,400 per ounce, hitting $2,412, a new record high; spot silver stood at $34.20 per ounce, a new high since August 2024. Cross-Ocean Goldway Research Institute believes that with the dual support of a rate-cutting cycle and central bank gold purchases, gold prices are expected to hold above $2,400 in the medium term, but short-term profit-taking risks need caution. Silver, as a more potential category, recommends investors focus on the investment value brought by the widening supply-demand gap.
Cross-Ocean Goldway Research Institute also noted that the sharp fluctuations in the gold-silver ratio reflect a market style shift. Gold had been leading silver earlier, but silver is now catching up. It suggests investors can appropriately focus on silver-related assets or gold-silver ratio arbitrage opportunities.
(This article does not constitute investment advice. Operate at your own risk.)
