Bond Yields and Stronger USD Spark Precious Metals Plunge

The global precious metals market took a sharp hit as government bond yields climbed across the board and the US Dollar Index rose. Spot silver (XAGUSD) plummeted over 3% to $64.46, its lowest point since August 19, while spot gold (XAUUSD) fell below $4,400 per ounce.

The pullback was largely driven by rising energy prices pushing up inflation expectations, leading the market to reassess central banks' monetary policies. Japan's 30-year government bond yield reached an all-time high of 4.18%, while the UK's 30-year yield rose to 5.88%, its highest level since 1998.

The increase in bond yields made non-yielding assets like gold and silver less attractive, as a stronger US dollar further suppressed their prices. Federal Reserve Chair Warsh's hawkish policy signals also contributed to the decline, indicating that the Fed might raise interest rates in September and December.