Gold and Silver Prices Plummet Amid Rate Hike Fears

Gold and silver prices have retreated from their peaks in recent months, with gold falling nearly 20% and silver dropping by 45%. The correction has removed some of the excesses that built up during the record run, but experts warn that the slide may not be over yet. In fact, most experts maintain that the long-term thesis for both metals is still intact.

The recent correction in gold and silver prices can be attributed to a combination of factors, including the strengthening US dollar, rising US Treasury yields, and expectations of further Federal Reserve rate hikes. Chirag Mehta, Chief Investment Officer at Quantum Mutual Fund, notes that 'profit booking' in gold due to rebalancing of portfolios amid stress on other assets and a strengthening of the US dollar contributed to the pullback.

Kunal Valia, Founder of StatLane, observes that the correction was primarily rates-driven repricing rather than mean reversion. He adds that silver's steeper correction reflects its dual identity as both a monetary asset and an industrial commodity.