Gold and silver continue to lose value despite market conditions being ideal for them.
Key details
Gold and silver investments took an additional dive in the past week following months of decreasing value.
Since their recent peaks on March 8…
- gold dropped 18.3% and
- silver dropped 50.3%.
- this marks five consecutive months of decline
“Gold and silver prices softened for a fourth straight day on Wednesday as traders bet that the Federal Reserve is likely to keep benchmark interest rates higher for longer following Fed Chair Jerome Powell’s Jackson Hole speech last Friday. Meanwhile, gold is set to finish August with its fifth straight monthly decline—its longest monthly losing streak in about four years,” says MarketWatch.
Why it’s news
Gold has always been considered a safe haven during times of high inflation because it tends to increase in price during periods when the cost of living is increasing. Silver is similarly considered a safe bet as it is both an investment and industrial metal and is constantly in demand.
Despite an inflation rate of around 9%—the highest in four decades—gold and silver have continuously dropped.
Jerome Powell’s Jackson Hole speech, wherein he foreshadowed the Fed’s upcoming hawkish interest rate hikes in September, negatively impacted the market’s interest in gold and silver as non-yielding assets will have to struggle with higher interest rates, CNBC reports.
“In a tug of war game between gold and silver prices on the one end, and higher interest rates and a strong U.S. dollar on the other end, the two precious metals have lost the battle,” says MarketWatch.
Notable quote
“Gold prices saw two powerful surges, in summer 2020 and another in early winter 2022—corresponding with Russia’s invasion of Ukraine… Gold has since corrected substantially, attributing the pullback to a steady rise in interest rates and vocal articulation of the Federal Reserve’s monetary tightening policies, which also has driven strength in the U.S. dollar,” says MarketWatch.
