Topline
Gold and silver prices fell to seven-month lows Wednesday morning, with gold dipping below the $4,000 mark for the first time since November as analysts blame a stronger dollar and expectations the Federal Reserve may hike interest rates this year.
Gold and silver hit seven-month lows Wednesday. (AP Photo/Matthias Schrader)
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Key Facts
The price of gold is $3,988.60 as of 9:15 a.m. EST Wednesday, down nearly 4% and marking the metal’s lowest price since November.
The price of silver is $58.44 as of 9:15 a.m. Wednesday, down nearly 6% and slightly higher than the low price of $58.09 it hit earlier in the morning.
Both metals have declined steadily throughout the past week, with silver down about 16% and gold down about 8% from one week ago today.
Silver’s price is now less than half of the all-time high price of $121 it hit in January, as metals have fallen in price throughout the war in Iran and as traders expect the Federal Reserve will raise interest rates later this year.
Ole S. Hansen, head of commodity strategy at Saxo Bank, said in a post on X Wednesday morning metal prices are “pressured by a stronger dollar amid a technology-led equity selloff.”
The U.S. dollar index is up 0.36% on Wednesday morning to 101.77, its highest level in more than a year, and tech stocks faced a selloff this week, which some analysts attributed to “anxiety” over chip maker Micron reporting earnings.
when did gold and silver peak?
Following a months-long historic price rally, gold and silver hit all-time highs in late January. Gold, at its peak, was priced at about $5,600 an ounce, while silver hit about $121. The rally was fueled by factors including interest rate cuts, President Donald Trump’s tariffs, international tensions and increasing demand for metals from technological industries. Prices came crashing down in late January shortly after Trump named Kevin Warsh to lead the Federal Reserve, as he was considered less likely than other presumed candidates to slash interest rates, which typically causes metals prices to rise.
will the federal reserve raise interest rates?
At its first meeting under Warsh last week, the Federal Reserve held interest rates steady, saying the economy is “expanding at a solid pace despite elevated uncertainty,” referring to the war in Iran. Nine of the panel’s 18 officials favored at least one interest rate hike this year. If the Fed decides to raise interest rates later this year, gold and silver prices will most likely decline, analysts have said. “In our world interest rates are like gravity,” Philippe Gijsels, chief strategy officer at BNP Paribas Fortis, told CNBC. “When interest rates rise, gravity increases and all assets are pulled down, including precious metals.” Analysts at Germany’s Commerzbank said earlier this month as long as “expectations of interest rate hikes prevail,” gold prices are likely to stay down.
key background
Gold and silver have generally declined in price throughout the war in Iran, bucking conventional wisdom that metals are “safe-haven” assets that rise in price amid periods of international uncertainty. Gold and silver have traded inversely with oil prices throughout the war. ANZ research analysts said in a note Tuesday gold has dropped more than 22% throughout the Iran war, and despite being known as a safe-haven asset, it “failed to provide any protection against such a big cross-market selloff” this week.
further reading
Gold And Silver Futures Fall As Fed Indicates Future Hikes (Forbes)