US-Iran Negotiations Breakdown Triggers Gold and Silver Price Plunge
Gold and silver prices plummeted on Monday after negotiations between the US and Iran broke down. The failed peace talks sparked concerns about inflation, leading to a jump in crude oil prices. This has reignited expectations that the US Federal Reserve may need to keep interest rates higher for longer.
The international market saw gold prices drop by over 3% to trade around $4,119.17 per ounce. Silver's fall was more severe, losing over 4% to trade near $61 per ounce. A stronger dollar and elevated US treasury yields are also weighing on market sentiment.
Economist Peter Schiff noted that a bond bear market is bullish for precious metals, as it indicates a weaker US economy, rising budget deficits, and higher inflation. However, Ashish Rajodiya, Head, Commodities at PL Capital, stated that elevated crude prices are reinforcing the case for further Fed tightening.
Rajodiya also highlighted that more than 68% of market participants expect the US Fed to increase interest rates again by 25 basis points in October. The metal's next move may depend on the Fed's rate decision and whether diplomatic engagement between the US and Iran leads to a de-escalation.