Sharp decline in precious metals: Fed's stance hits silver and gold

As the sharp wave continues in global commodity markets, the ounce price of silver has fallen below 57 dollars, reaching its lowest level in the last eight months. The rise of the US dollar to its highest level in the last year against major world currencies has been influential in this loss. As costs rise for those wanting to invest in dollar-denominated commodities using different currencies, outflows from precious metals have accelerated.

FED MAINTAINS TIGHT STANCE ON INTEREST RATE POLICIES

The messages from the Fed meeting held last week are also determining the direction of the markets. While no changes were made to interest rates, Fed officials clearly stated that tight monetary policies will continue for some time. Chairman Kevin Warsh's clear statements against inflation have increased the probability of an interest rate hike in September among investors. Analysts point out that additional interest rate steps could also come to the agenda by the end of the year.

These developments reduce the appetite for buying precious metals like silver, which do not provide interest income. In a high-interest environment, investors are beginning to allocate less space to precious metals in their portfolios. This situation increases the downward pressure on silver prices.

NEW BALANCES IN OIL AND INFLATION

On the other hand, positive developments in diplomatic contacts between the US and Iran have allowed oil prices to return to pre-war levels. This decline observed in energy prices, while easing inflation concerns, has strengthened the likelihood of the Fed maintaining its current tight monetary policies. Therefore, these developments have also supported the selling pressure on metals such as both gold and silver.

THE DYNAMIC IS THE SAME FOR GOLD

The gold market is moving in a similar downward trend. The spot price of gold per ounce fell by 0.4 percent to 3,985.89 dollars. The precious metal had seen its lowest level since November 2025 on Wednesday.

As the value of the dollar increases with the strengthening of interest rate hike expectations in the US, the pressure on gold prices continues. August gold futures also fell by 0.2 percent to 4,001.60 dollars. In particular, bullion gold was priced below 4,000 dollars for the first time in a long time on Wednesday, with the increase in Fed-induced tightening expectations.

Markets will closely monitor the steps the Fed will take in the coming period. The search for direction in precious metals will continue to be shaped in the shadow of monetary policy decisions.

News Source: 12punto