Gold and silver prices drop on higher US interest rate fears

Precious metals faced a sharp sell-off on Tuesday, with silver plunging more than 3% and gold dropping below key technical levels as investors braced for higher-for-longer U.S. interest rates.

Spot gold slid over 0.6% to trade at $4,290 per ounce, extending its recent downward momentum. The decline follows a string of strong U.S. macroeconomic data and hot inflation reports that have forced traders to recalibrate their expectations for Federal Reserve rate cuts. Because gold does not yield interest, it historically loses its luster when borrowing costs are projected to stay elevated, News.Az reports, citing Anadolu Agency.

Silver experienced an even rougher trading session, tumbling 3.5% to hover around $65.50 per ounce under pressure from surging U.S. Treasury yields and a strengthening dollar.

Beyond monetary policy, a tentative pause in Middle East hostilities actively stripped the geopolitical risk premium out of the commodities market. As direct attacks between Israel and Iran subsided, safe-haven demand quickly evaporated, dragging down both precious metals and crude oil prices.

Despite the Tuesday slump, market analysts point out that gold remains at historically elevated levels following massive rallies earlier in the year. While investors turn their attention to upcoming U.S. inflation data for clearer signals on the Fed's next moves, silver remains highly vulnerable to shifting manufacturing expectations given its dual role as both a luxury asset and a key industrial component.

News.Az 

By Aysel Mammadzada