Precious metals tumble as Fed rate hike fears strengthen US dollar

Gold and precious metals markets posted sharp declines in the first half as expectations of Federal Reserve rate hikes—driven by inflationary pressures from the US-Israel-Iran war—sent investors fleeing to dollar-denominated assets and Treasury bonds. Hawkish policy expectations formed the primary driver of the downturn, with Fed Chair Kevin Warsh's emphasis on price stability reinforcing bets that the central bank would tighten twice by year-end.

The yellow metal started the year at $4,313 per ounce, surging to a record $5,600 in January and gaining 8.5% through February before reversing sharply in March—when it fell 11.32% to $4,667 in the steepest monthly drop since the 2008 financial crisis—and continuing downward to close June at $4,007 for a 7.1% first-half decline.

Industrial metals post steeper declines

Silver—more sensitive to growth concerns due to industrial applications—proved even more volatile, starting at $71 and hitting a record $121.7 in January before plunging 17.4% over the half to close at $58.7 in June. Platinum dropped 24.4% to $1,443 per ounce as mine production rose and investment demand waned, according to the World Platinum Investment Council, while palladium declined 24.2% to $1,212 amid structural shifts in China's auto sector toward electric vehicles that eroded long-term demand for the autocatalyst metal.

Analyst warns of sustained selling pressure

Zafer Ergezen, a futures and commodities expert, told Anadolu that expectations for a silver rebound faded as persistent inflation eroded global growth projections. Ergezen said silver is facing massive selling pressure and any price rallies will likely result in profit-taking until rate cuts resume or expectations for rate cuts come to the fore, noting that the $50-55 range could act as strong support for the metal while sustained upward movements remain highly unlikely with bond yields continuing to rise and the US Dollar Index remaining strong.