Gold and silver prices fell on Thursday as fresh U.S. inflation data reinforced concerns that the Federal Reserve may keep interest rates elevated or even resume tightening. Gold slipped below $4,400 per ounce, while silver dropped more than 2% toward the $65–$66 range.
The latest U.S. Producer Price Index showed wholesale prices rose 0.4% in August and 5.4% year-over-year. Although the monthly reading was in line with expectations, it was still hot enough to raise bets on additional Fed tightening. The U.S. 10-year Treasury yield pushed above 4.9%, near its highest since late 2023, while the 30-year yield climbed above 5.3%. A stronger dollar added further pressure on dollar-denominated metals.
The standard relationship is bearish for non-yielding assets: higher inflation leads to higher rates, which makes government bonds more attractive relative to gold and silver. Silver has been hit harder than gold because it is more volatile and carries more industrial exposure to concerns about high borrowing costs and economic weakness.
The Treasury’s decision to increase its long-dated buyback operation to as much as $6 billion did little to calm the bond market. Goldman Sachs argued that buybacks alone are unlikely to materially lower long-term yields because they do not eliminate the government’s underlying borrowing requirement.
Still, the report notes a longer-term bullish case for gold under the idea of fiscal dominance. If high rates make U.S. debt servicing increasingly difficult, policymakers could eventually tolerate more inflation, suppress borrowing costs, or loosen financial conditions. Historically, such conditions have been friendlier to hard assets. Yield curve control, used after World War II until the 1951 Treasury-Fed Accord, is mentioned as a possible extreme future scenario, though there is currently no indication the Fed is considering it.
For now, short-term pressure remains. Spot gold was reported around $4,385 and silver around $64.80. The next key test is the August CPI report scheduled for September 11. Another elevated inflation reading could push yields and rate expectations higher, potentially sending both metals and broader risk assets lower.
