Precious metals gave back ground Tuesday morning as traders moved decisively toward pricing a Federal Reserve rate increase this month, reversing a positioning that looked very different only a week ago.
Gold traded at $4,432.20 per troy ounce at 7:56 a.m. ET, according to Yahoo Finance, after December futures opened at $4,498.70 — up 0.4% from Monday — and then faded through the morning. Trading Economics put spot gold at $4,358.74 later in the session, down 1.86% on the day. Silver fell harder in percentage terms, slipping to $65.37 by 8:08 a.m. ET after opening above Monday's level, with Forbes Advisor marking the metal at $64.72, a 2.77% decline from Monday's $66.56.
Rate Expectations Flipped in a Week
The driver is not subtle. CME Group's FedWatch tool showed a 66.4% probability of a 25-basis-point increase at the Sept. 15-16 FOMC meeting, with 33.6% odds that policymakers hold. One week earlier, the same tool favored no change at 60.4%. CNBC reported odds jumped to 66.1% on Monday, roughly double where they sat before Fed Chair Kevin Warsh spoke at Jackson Hole.
Warsh's remarks did the work. "While this summer's [inflation] readings were better than expected," he said, "they do not tell me that underlying trends have meaningfully improved." He added that the central bank still has "work to do" on prices — language markets read as an endorsement of tightening rather than a placeholder.
For gold, higher policy rates are a direct headwind. Bullion pays no yield, so every basis point of additional return available in Treasuries raises the opportunity cost of holding it. That math has been running against metals since Warsh left the podium.
The Damage Is Recent, Not Structural
Context matters on the size of the pullback. Gold is down 2.8% from one week ago, but it remains up 9.7% over the past month and 31.1% over the past year. This is a repricing of the September meeting, not an unwind of the 2026 bull case.
The gold-to-silver ratio stood at 67.55 on Tuesday, up from 66.84 on Monday — silver underperforming gold on the day, consistent with its higher beta to industrial and rate-driven swings. J.P. Morgan Global Research expects that ratio to normalize toward 70 through the second half of 2026 and toward 75 in 2027, and forecasts silver at $63 per ounce in the fourth quarter against a full-year 2026 average of $70.
Bonds Set the Tone
Metals were not trading in isolation. Monday's session closed with the S&P 500 down 0.3% at 7,686.14, the Dow off 374.09 points, or 0.7%, at 53,185.90, and the Nasdaq Composite slipping 0.1% to 26,370.89. The 10-year Treasury yield rose two basis points to 4.75%, its highest since Jan. 15, 2025, while the 30-year added three basis points to 5.243%.
That combination — long yields at multi-year highs, hike odds at two-to-one, and Middle East tensions keeping an inflation bid under crude — leaves gold squeezed between the two forces that usually support it. Until the Sept. 16 decision resolves, rates appear to be winning.
Sources: Yahoo Finance, CNBC, Forbes Advisor, Trading Economics, CME Group FedWatch, J.P. Morgan Global Research