Gold and Silver Prices Plummet as Bond Yields Soar to 12-Year High

Gold and silver prices took a hit on July 31 due to rising bond yields. The 30-year Treasury yield surged to 5.27%, its highest level since 2007, causing gold to open at $4,103 and briefly touch $4,112 before collapsing to an intraday low of $4,021. This decline represents a peak-to-trough drop of roughly $90 per ounce (2.21%). Gold closed the session at $4,045, down 1.42%.

Silver was hit even harder, opening near $59.00 and briefly touching $59.17 before selling off to $57.05, a decline of $2.11 per ounce (3.57%). It closed at $57.62, down 2.35%. Silver fell approximately 1.65 times as much as gold in percentage terms.

The traditional relationship between yields and precious metals suggests that rising bond yields should lower the prices of non-yielding assets like gold. However, some analysts argue that this relationship may not hold forever, especially if the 40-year bond bull market is truly over. In a world where sovereign debt confidence is deteriorating, gold and silver could eventually decouple from yields.