Gold and Silver Prices Plummet as Rate Hike Expectations Surge

Gold and silver prices plummeted on Thursday as investors anticipated a rate hike by the Federal Reserve. The US dollar strengthened, reaching its highest level in months, while Treasury yields soared.

The December gold futures contract declined $80.60, or 1.81%, to $4,379.90 per ounce at 18:40 GT on Thursday on the COMEX division of the New York Mercantile Exchange. This marks a weekly loss of 3% for gold, but it remains up about 1% year-to-date.

Silver fared even worse, falling below $65 toward the end of the trading week. October silver futures erased $4.256, or 6.2%, to $64.39 an ounce, down nearly 5% this week and over 9% this year.

The Bureau of Labor Statistics' Producer Price Index (PPI) release last month showed a 0.4% increase in producer inflation, driven primarily by diesel costs and other energy inputs. The upcoming Consumer Price Index (CPI) data on September 11 is expected to show unchanged annual inflation at 3.4%, with core inflation easing to 2.4%. Elevated inflation has boosted expectations of a rate hike, which futures markets now put at 64%.