Gold and Silver Fall as Oil Surges, Fed Rate Hike Bets Rise

Gold and silver prices fell Thursday as rising oil prices and growing expectations of a Federal Reserve interest rate hike weighed on precious metals. Gold was trading at $4,397.50 as of 10:45 a.m. EST, down about 1.5%, while silver dropped nearly 6% to $64.86.

The decline came as oil prices climbed sharply amid heightened tensions between the United States and Iran. Brent crude rose about 4% early Thursday to $105.07 by 10:30 a.m. EST, its highest level since May. Some analysts linked the pressure on gold and silver to the jump in energy prices.

Precious metals also weakened after the Bureau of Labor Statistics reported that U.S. wholesale prices increased 0.4% in August. The data arrived just days before the Federal Reserve is scheduled to meet to determine whether to raise interest rates.

Kyle Rodda, senior financial market analyst at Capital.com, told Reuters that the wholesale price figures “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 that the figures increase “the chance of the Fed hiking interest rates next week.”

Market expectations for a September rate increase have strengthened. CME Group’s FedWatch tool puts the probability of a hike at 69.8% for next week’s meeting, compared with roughly 50% a week earlier. Expectations increased in late August after Fed Chair Kevin Warsh said during a speech at the Jackson Hole symposium that inflation remained too high and the Federal Reserve could have “work to do” if price pressures fail to ease.

Trump administration officials have meanwhile urged the central bank to reduce borrowing costs. President Donald Trump wrote on Truth Social last week that the United States should have the “LOWEST RATE” in the world and warned, “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.” Trump said elevated interest rates leave the United States at “a very unfair disadvantage.” Vice President JD Vance also said last week that “the Fed should be lowering interest rates,” adding that Trump wants rates reduced because “he wants Americans to be able to afford a home.”

The next major inflation reading arrives Friday, when the Bureau of Labor Statistics is scheduled to publish consumer price index data. It will be the final major inflation measure available to the Federal Reserve before its meeting next week. David Payne, an economist at Kiplinger, said, “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.”

Gold and silver had reached record levels earlier this year before plunging in late January. Gold climbed as high as $5,600, while silver reached $121. The metals benefited from factors including interest rate cuts, Trump’s tariffs, demand from technology industries and rising international tensions.

Prices later fell after Trump selected Warsh as his nominee for Federal Reserve chair, with Warsh viewed as more hawkish on monetary policy. Gold and silver generally declined during the Iran war as the metals moved inversely to oil prices. After remaining relatively subdued through the summer, both metals briefly advanced in late August, with gold reaching a 15-week high.