Precious Metals Plummet as US Inflation and ECB Rate Hike Pressure Markets
Gold and silver prices fell sharply on Thursday due to strong US producer inflation data, which fueled expectations of a Federal Reserve rate hike. The European Central Bank (ECB) also raised borrowing costs, further pressuring precious metals.
The sharp decline in gold was less severe than that of silver, with gold falling 1.8% to $4,318.60 per ounce as of 1905GMT. Silver prices plummeted by a more significant margin, dropping 5.5% to $63.62 per ounce.
US producer inflation accelerated to 5.4% in August, exceeding market expectations of 5.3%. This surge in inflation was primarily driven by a sharp increase in energy prices and broader cost pass-through across the economy.
The data strengthened expectations that the Fed could tighten monetary policy further to contain renewed inflationary pressures. Money markets now price in a probability of over 70% that the US central bank will raise interest rates at its September 16 meeting.