It’s the worst day in the precious metals market since the January 29 rout.
Gold is down 5.8%, or $282, to $4537 while silver is down 11% to $66.82.
The trigger for the selling was the Federal Reserve decision yesterday and a subsequent repricing of the Treasury curve and expectations of other central banks. The market is now pricing in just 1.2 bps of easing in 2026 compared to 60 bps before the Iran war and 20 bps before the FOMC.
I find it bizarre that markets are now just realizing the Federal Reserve and other central banks might not cut rates into an energy shock with inflation above 2% even beforehand.
Today’s Bank of England decision further underscored that with the market now seeing hikes coming this year. The vote was 9-0 to hold rates compared to 7-2 previously. Markets are pricing in 67 bps of BOE rate hikes in 2026 after MPC announcement vs 39 bps beforehand. In turn, UK 2-year yields are up 37 bps to 4.466%.
It’s fair to say that US markets are also pricing in some fears around rate hikes, which is a game changer. That has risk assets in Europe getting beaten up with stock markets down 2% to 2.9%.
As for the chart, gold could test the 2026 low of $4400 but that should offer some strong support.
Next up is the ECB rate decision at 9:15 am ET and while they’re likely to hold rates, the market is now pricing in 67 bps in hikes this year. I expect President Lagarde to push back on that today but it’s impossible to fight Mr. Market.
The silver chart is similar as it nears the February low of $64.00.
This article was written by Adam Button at investinglive.com.
