Gold and Silver Prices Plummet on Weak Demand and Bond Sell-Off

The prices of gold and silver fell again on Wednesday due to a drop in government bond prices and weak demand. Gold for London settlement dipped below $4300 per troy ounce, its lowest level in four weeks, after India's Prime Minister Narendra Modi urged households not to buy gold as the Hindu calendar's massive autumn festive and wedding season approaches.

Silver touched a new two-week low at $63.33 before rallying to trade 9.5% below its peak last Friday. The sudden focus on silver PV thrifting comes as China's installed solar power capacity overtakes that of coal for the first time ever, becoming the world No.2 economy's single largest power source according to the National Energy Administration.

Rhona O'Connell, a precious metals specialist at StoneX, called the sell-off in major economy bonds a 'tailspin'. She notes that gold and silver are watching the Fed and are on the back foot accordingly. However, she also points out that the undertone from the official sector gives gold more buoyancy.