Gold and Silver Plummet on Hawkish Fed Outlook

The price of gold has fallen by approximately 2.0% to around $4,357 an ounce, while silver is down about 2.6% to near $64.79. This decline in precious metals prices does not seem to be related to the recent sanctions imposed on Iran's gold sector.

The US Treasury named gold as one of five sectors exposed to secondary sanctions due to its connection to Iran's economy. However, this development has not had a significant impact on the current price movement. The real reason behind the decline in gold and silver prices is related to interest rates.

According to Kevin Warsh, a 25-basis-point September hike now has a 65-68% chance of occurring, up from around 40% a week ago. This increase in expected policy rates has raised the cost of holding an asset with no yield, such as gold and silver.

The higher expected interest rates have also pushed the 10-year Treasury yield to its highest level since January 2025 at 4.79%. This rise in yields is a key factor contributing to the decline in precious metals prices today.