Precious Metals Slump Across the Board
Precious metals markets faced heavy selling pressure, with spot gold falling over 3% in U.S. trading to as low as $3,891 per ounce, the lowest level since October 2025 and a one-year low. Gold is down over 6% so far this month, facing pressure for a second straight monthly decline. Spot silver fell even more sharply, dropping nearly 5% to $49.34 per ounce, breaking below the $50 mark for the first time since November 2025. Platinum and palladium also fell 4% and 3.1% respectively, both hitting multi-month lows.
Hawkish Rate Expectations Weigh on Buying
The core pressure behind this round of declines came from shifting global monetary policy expectations. This week, the U.S. Federal Reserve, the European Central Bank and the Bank of Japan all announced unchanged interest rates, but clearly signaled that the tightening cycle is not over, with the U.S. and European central banks further warning that surging energy prices could push inflation higher. U.S. data released Thursday showed inflation accelerated in September, with higher gasoline and other goods prices pushing up consumer prices, strengthening market expectations that the Fed could raise rates in December. International oil prices continued to rise, on track for a fourth straight monthly gain. Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, noted that inflation concerns have pushed several central banks to turn hawkish, with rates set to stay higher for longer. Because gold pays no interest, a high-rate environment raises the opportunity cost of holding it and dampens allocation demand.
Tech Selloff Spills Over
In addition to macro factors, volatility in technology stocks deepened the decline in precious metals. Market concerns over the returns on massive capital spending in the artificial intelligence industry heated up, with the tech-heavy Nasdaq index plunging over 2% on Friday. Analysts at Commerzbank noted that a sharp drop in tech stocks could force investors to sell other assets and trigger margin calls, amplifying selling pressure on gold and silver, with even safe-haven assets affected as liquidity tightened. The bank believes, however, that the recent decline in precious metals may have been excessive, with a rebound possible ahead.
Silver Supply-Demand Fundamentals Reverse
Compared with gold, silver fell more sharply, linked to changes in supply-demand fundamentals. Earlier this year silver had surged to $121 per ounce, when a global supply deficit, physical silver bar and coin shortages in some regions, and growing demand expectations from the solar industry jointly pushed up prices. But high prices have curbed demand, with metals research firm Metals Focus noting that high silver prices have clearly suppressed jewelry and silverware consumption, while solar companies have reduced silver usage by improving material efficiency and seeking substitute materials, and weak physical investment demand has further weakened support. The firm expects the silver market supply deficit to narrow this year and possibly turn into a surplus next year. However, if markets scale back expectations for sharply tighter monetary policy in 2027, silver still has the potential to outperform gold again.