Fed Hike Odds Surge, Impacting Gold and Silver Prices Ahead of Rate Decision
The Federal Reserve's upcoming rate decision on Wednesday has increased expectations for higher interest rates, which in turn may impact gold and silver prices. The rising cost of opportunity due to increased bond yields and other non-yielding assets makes it more expensive to hold onto these precious metals.
Geopolitical tensions, however, are creating an energy supply disruption that could positively support the gold market. The Houthi's drone attacks on Saudi Arabia's East-West pipeline pose a risk to supply in the Middle East, and similar disruptions have been seen through the Bab el-Mandeb and Strait of Hormuz.
Silver is particularly susceptible to rising borrowing costs and energy prices due to its industrial exposure. This may impact global manufacturing demand, further pressuring silver prices.