What is happening to gold and silver?

An analytical reading of the impact of American variables on precious metals

In recent weeks, gold and silver experienced a strong upward wave driven by safe-haven demand, as well as market expectations of imminent easing of U.S. monetary policy.
However, recent developments in the U.S. economy have clearly changed the pricing environment, leading to sharp corrections in precious metal prices.

So, what has actually changed?

First: U.S. inflation and changing interest rate expectations

U.S. inflation data showed a relative slowdown in the pace, but at the same time confirmed that inflation remains at relatively high levels.
This pushed markets away from the scenario of rapid and early rate cuts, and toward pricing a higher interest rate environment for a longer period.

Gold and silver do not generate yields, so rising interest rate expectations increase the opportunity cost of holding them, creating downward pressure on their prices.

Second: Rising real U.S. yields

With the repricing of the monetary policy path:
• U.S. Treasury yields increased
• Real yields also rose

This factor was central in accelerating the correction, as bonds become more attractive compared to gold and silver, prompting some capital to reallocate away from precious metals.

Third: The strength of the U.S. dollar

The rise in yields, along with relative strength in U.S. economic data, directly reflected in the dollar’s strength.

Since gold and silver are priced in dollars, a stronger U.S. currency:
• Reduces the purchasing power of investors outside the U.S.
• Adds additional downward pressure on prices

Fourth: Futures market dynamics

After significant price increases:
• Producers increased hedging by selling futures at high levels
• Meanwhile, buyers became more cautious, as the cost of hedging appeared high and unattractive

As prices began to decline, a herd behavior emerged:
Reducing positions, selling momentum, and quick exits by risk-averse investors, which accelerated the pace of price decline.

Fifth: Why was silver more volatile than gold?

Gold is primarily considered a monetary metal, mainly influenced by interest rate expectations, yields, and dollar strength.

Silver, on the other hand, has an industrial component in addition to being a precious metal, making it more sensitive to re-pricing of economic variables, and thus more volatile in its price movements.

Summary

What we are witnessing currently does not represent a collapse in demand for gold or silver,
but rather a comprehensive re-pricing of American variables:

Inflation data
Monetary policy expectations
Yields
The dollar
Futures positions
Then, the price correction

Understanding this sequence helps investors distinguish between short-term volatility and the long-term outlook for precious metals.