Gold and silver lost about $1.05 trillion in market value on Monday, weighed down by bets for another Fed rate hike. Caught between a strong dollar and high bond yields, bitcoin has also stalled.
In brief
- Gold fell 2.9% and silver fell almost 5%, wiping out about $1.05 trillion in market value.
- The market is pricing in a nearly 70% chance of a rate hike in October, according to the CME’s FedWatch tool.
- Bitcoin followed suit, around $82,700, without serving as a refuge.
Gold below 4,200 dollars, 1,050 billion erased
Gold fell 2.9%, below $4,200 an ounce, its lowest since the beginning of August. The yellow metal had been under pressure for weeks. Silver plunged almost 5%, towards $62, breaking a threshold held since June. In total, around $1.05 trillion in market value has evaporated, according to BeInCrypto.
This decline is due to the very nature of these assets, which pay neither interest nor dividends. When bond yields rise, their opportunity cost rises. The American ten-year is moving at 5.20%, and a strong dollar also makes the purchase of metals more expensive for foreign investors.
Platinum and palladium lost around 2% each. Gold nevertheless remains far from its record: it is still trading around 25% below its January peak.
The Fed, oil and the dollar in the background
The trigger of the day is oil. Brent is trading around $107 per barrel, after Donald Trump’s rejection of an Iranian proposal on the Strait of Hormuz, and crude has gained nearly 70% this year. This outbreak fuels fears of inflation, therefore bets on tightening: the markets estimate the probability ofa turn of the screw in October, according to the CME FedWatch tool.
The Fed, for its part, raised its rates in September by 25 basis points, to 3.75%-4%, its first increase in more than three years. Sixteen of its eighteen officials anticipate a new turn of the screw in 2026, and Beth Hammack, president of the Cleveland Fed, repeated Friday that monetary policy must remain restrictive.
Bitcoin did not play the safe haven
Bitcoin followed suit: according to CoinGecko readings, it is trading around $82,700, down around 2.6% over twenty-four hours. The storm therefore crosses all non-yielding assets, from metals to cryptos.
Last week, however, bitcoin proved resilient: it held above $84,000 while the dollar rose, an unusual configuration between two often opposing assets. The history of bitcoin is also punctuated by such cold spells; in 2022, the previous tightening cycle had already damaged it.
What happens next will depend on the same variable for everyone. Markets are awaiting US employment figures, with the ADP survey on Wednesday and the official report on Friday. A disappointing reading could ease bullish bets and provide some respite for metals like bitcoin. A solid number would do the opposite. In the meantime, bitcoin is camped on the support of $81,000 to $83,000, already identified last week.
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