Precious Metals Sell Off Across the Board
Precious metals markets faced heavy selling, with spot gold falling to a one-year low and silver breaking below the 50 U.S. dollar mark for the first time since November 2025. On persistently rising energy prices, renewed U.S. inflation pressure, and hawkish signals from major central banks, market expectations that interest rates will stay high for a long time heated up sharply, keeping precious metals assets under pressure. In U.S. trading hours, spot gold fell more than 3%, touching a low of 3891 U.S. dollars per ounce, the lowest level since October 2025. Gold is down more than 6% so far this month, facing pressure for a second consecutive monthly decline. Spot silver fell nearly 5% to 49.34 U.S. dollars per ounce, while platinum and palladium fell 4% and 3.1% respectively, both touching multi-month lows.
Hawkish Policy Expectations Pressure Gold Prices
The core pressure behind this round of declines came from a shift in global monetary policy expectations. This week the Federal Reserve, the European Central Bank and the Bank of Japan all left interest rates unchanged, but clearly signaled that the tightening cycle is not over yet, with the U.S. and European central banks warning further that surging energy prices could further push up inflation. Peter Grant, vice president and senior metals strategist at Zaner Metals, noted that persistent inflation concerns have prompted many central banks to turn more hawkish, with interest rates staying high for a longer time, putting clear pressure on precious metals prices. U.S. data released on Thursday showed inflation accelerating in September, with rising gasoline and other goods prices pushing consumer prices higher, reinforcing market expectations that the Federal Reserve could raise rates in December. International oil prices continued to move higher and are set for a fourth straight monthly gain, and rising energy costs also increase the likelihood that central banks will extend tightening. Because gold itself pays no interest, a high-rate environment raises the opportunity cost of holding it, dampening investors' willingness to allocate.
Tech-Stock Selloff Magnifies Pressure
In addition to macro factors, sharp volatility in technology stocks further intensified the decline in precious metals. Analysts at Commerzbank noted that a sharp drop in technology stock prices could force investors to sell other assets and trigger margin calls, thereby amplifying selling pressure in gold and silver markets. Recently, market concerns over returns on huge capital spending in the artificial intelligence industry have heated up, technology stocks have sold off markedly, and the tech-heavy Nasdaq index plunged more than 2% on Friday. Against a backdrop of tightening market liquidity, traditional safe-haven assets such as gold were also affected. However, Commerzbank analysts believe the recent declines in precious metals prices may have been excessive and expect the market to rebound thereafter.
Silver Supply-Demand Fundamentals Shift
Compared with gold, silver fell even more sharply, driven not only by rate expectations but also by changing supply-demand fundamentals. Earlier this year silver had surged to 121 U.S. dollars per ounce, when a global supply deficit, physical silver bar and coin shortages in some regions, and growing demand expectations from the photovoltaic industry jointly pushed prices higher. But with prices staying high for a long time, demand has started to adjust. Precious metals research firm Metals Focus noted that high silver prices have clearly curbed jewelry and silverware consumption, while photovoltaic companies have also reduced silver use by improving material efficiency and seeking substitute materials, and weak physical investment demand has weakened market support. The firm expects the silver market supply deficit to narrow further this year and possibly turn into a surplus next year, with the earlier extremely tight supply situation expected to ease. However, if the market gradually scales back expectations for sharply tighter monetary policy in 2027, silver still has the potential to outperform gold again.