Gold and Silver Prices Plunge Amid Rising Oil Costs and Hawkish Fed Remarks

Gold and silver prices have taken a hit due to rising oil prices and hawkish remarks from Federal Reserve Chair Kevin Warsh, strengthening expectations for a US rate hike this month.

Gold price slipped almost 1.50% to trade around $4,377 an ounce on Tuesday, hovering near two-week lows, while silver has fallen by about 2.6% to trade around $64 per ounce.

The rise in oil prices has raised inflation concerns, supporting the likelihood of a near-term Federal Reserve rate increase, which is generally unfavorable for bullion. As gold is a non-yielding asset, its value is correlated with the opportunity cost of storing it. Investors typically favor dollar-backed assets over gold when yields increase.

The US Treasury bond yields are sending the clearest signal that interest rates are likely to remain higher for some time. This is a negative signal for gold. The yield on the US 10-year Treasury note increased to 4.79% for the fifth straight session, the highest since January 2025.