Topline
The prices of gold and silver fell Thursday morning as oil prices surged and expectations remained high that the Federal Reserve may hike interest rates at its September meeting.
The prices of gold and silver fell Thursday morning. (Photo by Christopher Furlong/Getty Images)
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Key Facts
The price of gold is $4,397.50 as of 10:45 a.m. EST Thursday, down about 1.5%.
The price of silver fell further, hitting a price of $64.86 as of 10:45 a.m. EST, down nearly 6%.
Some analysts credited the dip in the metals’ prices to surging oil prices, with the Brent crude index rising about 4% early Thursday to a price of $105.07 as of 10:30 a.m. EST, its highest level since May, as tensions between the United States and Iran increased this week.
Gold and silver also fell after the Bureau of Labor Statistics reported U.S. wholesale prices rose 0.4% in August, which comes days before the Federal Reserve is expected to meet and decide whether to hike interest rates.
Kyle Rodda, senior financial market analyst at Capital.com, told Reuters the wholesale price data “sort of tells us that there has been a bit of a pickup in underlying inflation in the U.S. economy, and a part of that is due to rising energy costs.”
Stephen Brown, chief economist for North America at Capital Economics, told the Wall Street Journal the inflation data raises “the chance of the Fed hiking interest rates next week.”
Will The Federal Reserve Raise Interest Rates?
It seems increasingly likely the Federal Reserve will hike interest rates in September, a move that typically causes gold and silver prices to fall. CME Group’s Fed Watch tool shows a 69.8% chance of a rate hike at the Fed’s meeting next week, higher odds than last week, when the chance of a hike was roughly 50-50. Expectations of a Fed rate hike rose in late August after Fed chair Kevin Warsh delivered a speech at the Jackson Hole symposium where he said inflation was still too high and the Fed may have “work to do” if it does not cool. Members of the Trump administration, though, have pushed the Fed to lower interest rates. In a post on Truth Social last week, President Donald Trump said the United States should have the “LOWEST RATE” in the world, warning, “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.” Trump said high interest rates “put the U.S.A. at a very unfair disadvantage.” Vice President JD Vance also said last week “the Fed should be lowering interest rates,” adding Trump wants interest rates to be lower “because he wants Americans to be able to afford a home.”
what to watch for
The Bureau of Labor Statistics will release consumer price index data Friday, the last important measure of inflation the Fed will see before it meets next week. “If the August report looks worse, as we expect it will, then the pressure will build on the committee to start raising short-term rates by a quarter of a percentage point at that meeting and the two following meetings in October and December,” David Payne, an economist at Kiplinger, said.
key background
The prices of gold and silver reached historic highs earlier this year, with gold hitting a record price of $5,600 and silver reaching $121 before crashing in late January. Prices were buoyed by factors including interest rate cuts, Trump’s tariffs, demand for metals from technological industries and growing international tensions. Prices crashed after Trump announced Warsh as his pick for Fed chair, as he was considered to be more hawkish on monetary policy. Gold and silver prices generally declined throughout the war in Iran, as the metals traded inversely with oil, and remained quiet throughout the summer before briefly spiking and hitting a 15-week high in late August.
further reading
Trump turns up the heat on Warsh as Fed rate hike looms (CNBC)
Trump doubles down on threat to halt trade with top partners unless Fed cuts rates (CNBC)
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