Gold and silver, two of the most precious metals, are experiencing significant downward pressure after inflation turned hot and bond yields began climbing. According to reports from The Financial Express, gold has decreased by 19% and silver by 38% from their January highs, indicating a rapid loss of bullish momentum. In January, gold made an all-time high of $5,602 with silver creating a record high of $121. Both precious metals have lost over 5% in the last 30 days, with silver dropping below $75 per ounce on Monday, marking the third consecutive session of declines.
The energy price shock from the Middle East is impacting overall inflation trends and thereby the price of gold and silver. As reported by The Financial Express, Iran's ongoing war and a 17% rise in oil prices over the past month indicate that inflationary pressures are likely to persist. Both US CPI and PPI data for April showed inflation making a comeback. The yield on the US 10-year Treasury note has climbed to nearly 4.63% on Monday, reaching its highest level since January 2025, while the yield on 30-year bonds has surpassed 5%, reaching its highest level in years. The stronger US dollar and increasing Treasury yields are putting pressure on silver and gold prices.
According to Kotak Neo – Commodity Research commentary, the selloff continued as markets further repriced the Fed outlook amid persistent inflation risks tied to the ongoing Hormuz disruption. Markets are now pricing nearly a 50% probability of a 25-basis-point Fed rate hike by December, up sharply from just 13.6% a week ago. The possibility of Federal Reserve rate cuts in 2026 is being ruled out, with the market anticipating a rate hike in the near future to control potential inflation spikes. Unless there is a meaningful shift in the interest rate expectations, the two precious metals may continue to face headwinds.
UBS strategists have reduced their full-year silver investment demand forecast to 300 million ounces, down from over 400 million ounces, due to decreased industrial demand and increased mine supply. As reported by The Financial Express, the bank also projected that the global silver market deficit will significantly narrow to approximately 60–70 million ounces, down from an earlier estimate of about 300 million ounces. On gold, analysts caution that it may experience further downside pressure if real yields rise, with some traders considering $4,000 per ounce as a possible support level.
