Rate Hike Bets Crush Gold and Silver Prices
Gold and silver prices fell on Tuesday as the US dollar strengthened and expectations of a Federal Reserve rate hike rose. The COMEX gold price dropped 0.78% to $4,045.20 per ounce, while COMEX silver declined by 2.16%, trading at $57.445 per ounce.
The primary pressure on bullion prices stems from the upcoming US Federal Reserve policy meeting. Financial markets are increasingly pricing in a potential interest rate hike, with data from the CME FedWatch tool showing a probability of 36.3% for a 25-basis-point increase, up significantly from 16% just one week ago.
As gold does not pay interest, rising rates make it less attractive compared to yield-bearing assets like government bonds. The stronger US dollar also increases the cost of gold and silver for international buyers, further weighing on price sentiment.