On September 10 in the United States, gold and silver fell sharply after higher-than-expected producer inflation data and an interest rate hike by the European Central Bank. As of 19:05 GMT, silver had lost 5.5% and was priced at $63.62 per ounce, while gold had declined by 1.8% to $4,318.60 per ounce, Anadolu Agency reports.
Producer inflation in the US
In August, producer prices in the United States rose by 0.4% month-on-month. Annual producer inflation accelerated to 5.4%, exceeding market expectations of 5.3%. The increase was linked to a jump in energy prices and signs of broader cost pass-through in the economy.
These figures strengthened expectations of further monetary tightening by the US Federal Reserve. Money markets assessed the probability of a rate hike by the US central bank at its September 16 meeting at more than 70%.
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ECB decision and oil prices
On the same day, the European Central Bank raised its three key interest rates by 25 basis points and warned that inflation risks remained tilted to the upside. This strengthened traders’ expectations of further monetary tightening in the eurozone.
Higher interest rates usually put pressure on precious metals, which do not generate income, as they increase the opportunity cost of holding them. According to Anadolu Agency, oil prices were also rising amid an escalation of strikes between the United States and Iran in the Middle East, increasing concerns about high energy costs and inflation. Despite the decline, silver remained nearly 54% more expensive than a year earlier, while gold was more than 19% higher.
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