Gold hits one-year low, silver slips below $50 on inflation worries and tech selloff

what happened

Gold futures fell on Friday to their lowest level in more than a year, while silver dropped below $50 an ounce for the first time since last November. According to Seeking Alpha, higher oil prices driven by wars in the Middle East and Russia-Ukraine are fueling inflation concerns and expectations of higher interest rates.

Crude oil rose more than 2% after another tanker attack in the Strait of Hormuz. US inflation accelerated in September, and economists now expect a rate hike in December. The Fed kept its benchmark rate at 3.75%-4%, and the ECB also held rates steady, but both warned that more expensive energy could push inflation higher.

Zaner Metals senior metals strategist Peter Grant said the message that higher rates will persist is weighing on precious metals. Peter Cardillo of Spartan Capital added that a sharp drop in tech stocks, down nearly 3%, may have triggered forced selling and margin calls, while a crypto hack pushed investors toward cash. December Comex gold fell 3.3% to $3,885.70 an ounce, and silver dropped 5.9% to $49.097.

why it matters

Higher interest rates raise the opportunity cost of holding gold and silver, which pay no yield. While markets price in a possible December hike, metals remain under pressure and expensive oil adds to inflation risks.

market impact

Gold and silver: expectations of higher rates and forced selling pressure prices

• ▼Gold pressure down — higher rates raise the opportunity cost of a non-yielding metal
• ▼Silver pressure down — tighter policy expectations and forced selling deepen the decline
• ▲Brent crude pressure up — the tanker attack in the Strait of Hormuz supports oil prices

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