Gold and Silver Prices Plunge Amid Iran Tensions and Rate Hike Fears
The prices of gold and silver fell sharply on Tuesday afternoon, marking their lowest levels in months. This decline was driven by rising tensions in Iran and expectations that the Federal Reserve might increase interest rates, which typically puts downward pressure on precious metals.
Key Facts
As of 3:15 p.m. EST on Tuesday, the price of silver stood at $65.78 per ounce, reflecting a drop of more than 4%. Earlier in the day, silver had fallen nearly 6% to a low of $64.46. Meanwhile, gold was priced at around $4,292 per ounce as of the same time, down nearly 2% from its opening level but slightly higher than its intraday low of $4,259.90.
Both metals have experienced a steady decline throughout June, with silver losing over 13% of its value since it opened at just over $75 on June 1. Gold has also lost about 6% of its value since the month began, when it started at approximately $4,575.
The last time gold and silver reached such low prices was in late March, a brief dip that analysts attributed to mixed messaging from Iranian and American leaders regarding peace talks. Before that, the metals hadn't been this low since December.
Silver is now far from the record-high levels it hit in late January, having shed almost half of its value since peaking around $120. Gold, too, has fallen significantly from its peak of around $5,600 in late January.
Why Are Metals Declining on Tuesday?
Several analysts have pointed to the ongoing tensions in Iran and the possibility of future interest rate hikes as key factors behind the decline in metal prices. Ole S. Hansen, head of commodity strategy at Saxo Bank, noted in a post on X that silver is experiencing a "renewed bout of weakness" as investors await clarity on inflation, energy prices, and the Federal Reserve’s policy path.
Analysts at Germany’s Commerzbank stated that as long as expectations of interest rate hikes persist—following a strong jobs report last week—gold prices are likely to remain under pressure. Ryan McKay, senior commodity strategist at TD Securities, also cited inflation fears, strong jobs data, and a heightened probability of rate increases as reasons for the decline.
The drop in metal prices coincided with recent strikes between Israel and Iran, as well as President Donald Trump's declaration that the United States "must" respond to Iran allegedly shooting down a U.S. Apache helicopter near the Strait of Hormuz.
What to Watch For
Analysts are closely watching the release of U.S. inflation data for May, scheduled for Wednesday. If the data surprises on the upside, gold prices could fall further, according to Commerzbank analysts.
Tangent
Metals prices also dipped late last week, with silver falling more than 6% and gold declining more than 2% on Friday after the Bureau of Labor Statistics reported stronger-than-expected jobs data for May. The report showed the U.S. added 172,000 nonfarm jobs in May, while the unemployment rate remained at 4.3%.
Bart Melek, global head of commodity strategy at TD Securities, noted that the jobs report makes it "quite unlikely that the Fed is in any mood whatsoever to lower rates," highlighting the implications for gold, where the cost of carry is becoming increasingly high.
Key Background
Despite the recent declines, gold and silver are still up significantly year-over-year. However, they have come down from the historic levels reached in late January, when silver peaked above $120 and gold hit a high around $5,600. These peaks were driven by factors such as interest rate cuts, Trump’s tariffs, international tensions, and increased demand for silver from the technology industry.
Prices crashed in late January after Trump named Kevin Warsh, seen as less likely to slash interest rates, as his pick to lead the Federal Reserve. Since then, metals prices have generally declined amid the ongoing Iran war, with oil prices rising in tandem.
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