Rising Oil Prices and Yields Threaten Gold and Silver
Precious metals are under pressure as rising oil prices and increased US Treasury yields continue to weigh on gold and silver prices. Gold has slipped almost 1.50% to trade around $4,377 an ounce, while silver has fallen by about 2.6% to trade at $64 per ounce.
The yield on the US 10-year Treasury note increased for the fifth straight session, reaching its highest level since January 2025, and putting more pressure on gold prices. This is because gold is a non-yielding asset, and investors typically prefer dollar-backed assets over gold when yields increase.
Oil prices have also been rising, driven by tensions in the Middle East, which are increasing inflation concerns and supporting the likelihood of a near-term Federal Reserve rate hike. The Fed's hawkish remarks from Chairman Kevin Warsh strengthened expectations for a US rate hike this month, with markets now expecting a 25 basis point increase.
Despite the current geo-economic factors remaining supportive for gold, sustained investment demand and central bank buying may continue to support gold prices over the long term. However, volatility in silver prices is expected to be higher than in gold, due to increased usage in electronics and other sectors.