Gold Prices Reach One-Year Low, Silver Dips Below $50 Amid Inflation Concerns
NEW DELHI: Precious metals are facing significant declines, with gold prices hitting a one-year low and silver dropping below $50 an ounce for the first time in nearly a year. Rising energy costs and persistent inflation concerns are dampening investor sentiment, as expectations grow that U.S. interest rates may remain elevated for an extended period. Both metals continued their downward trend on Friday, with silver experiencing a sharper decline.
Gold prices fell 2.7% to $3,910.53 per ounce, marking the lowest level since October 2025. U.S. gold futures for December delivery also decreased by 2.8%, settling at $3,919.60 per ounce. Bullion prices have dropped 5.9% this month, indicating a potential second consecutive monthly decline. Silver prices fell 5.8% to $49.34 per ounce, dipping below the $50 mark for the first time since November 2025.
Why are precious metal prices falling?
The prospect of sustained high interest rates is exerting pressure on precious metals. Increased energy prices have heightened inflation concerns, leading central banks to adopt a cautious approach to monetary policy. Major central banks, including the U.S. Federal Reserve and the European Central Bank, kept interest rates unchanged this week but indicated that the tightening cycle may not be over. Both institutions flagged inflation risks linked to rising energy costs.
Peter Grant, vice president and senior metals strategist at Zaner Metals, noted that ongoing inflation concerns are prompting central banks to maintain a hawkish stance. Despite the recent holds by major central banks, the prevailing theme of higher rates is impacting precious metals negatively. Recent U.S. inflation data further fueled these concerns, showing an acceleration in September as consumers faced higher prices for gasoline and other goods.
Tech stock sell-off adds to precious metals pressure
The recent decline in technology stocks may have further pressured precious metals, with analysts at Commerzbank suggesting that forced selling and margin calls could be contributing factors. They believe the drop in precious metal prices has been excessive and anticipate a recovery. The tech-heavy Nasdaq was also expected to open lower on Friday due to concerns over artificial intelligence spending affecting technology stocks.
Meanwhile, oil prices continued to rise, heading for a fourth consecutive monthly gain. Increasing energy costs have reinforced expectations of prolonged elevated interest rates, making non-yielding assets like gold less appealing.
Asian gold demand remains subdued
Weak physical demand in key Asian markets is compounding the challenges for gold. Domestic buyers have been hesitant to make purchases this week, anticipating further price declines. In China, the largest gold-consuming country, demand has also remained lackluster, providing little support for the market. The sell-off extended to other precious metals, with platinum prices dropping 4% to $1,428.35 per ounce, the lowest since September 2025, and palladium falling 3.1% to $975.25 per ounce, reaching its lowest level since June 2025.
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