Gold Sinks 2%, Silver Falls 3.7% on Hawkish Fed and Rising Yields

Gold and silver prices experienced significant declines during the week ended September 25 due to hawkish US Federal Reserve commentary, a firmer dollar, and rising Treasury yields. Spot gold fell by over 2% to settle near $4,288 per ounce, while spot silver lost nearly 3.7% to trade around $63.90 per ounce.

The sharp repricing of US interest-rate expectations was the dominant driver behind these declines. Following a 25 basis point rate hike in September, two Fed policymakers indicated that additional tightening may be necessary to curb inflation, raising the probability of an October rate hike to approximately 70%.

The stronger dollar and rising yields created a dual headwind for precious metals, increasing the opportunity cost of holding non-yielding assets. Despite geopolitical tensions escalating with a Houthi missile attack on Saudi Arabia, which lifted oil prices by approximately 3%, gold failed to sustain its rally.