Gold and silver retreat sharply amid expectations of two 25 basis point Fed rate hikes by March 2027, reversing 2025’s inflation-driven rally.
Gold prices fell below $4,000 per ounce, down 28% from January’s peak of $5,600, as markets price in tighter monetary policy. Silver plunged over 50% from its record high near $120, trading under $59 on Wednesday.
The sell-off reflects growing concerns over inflation and potential rate hikes under new Fed Chair Kevin Warsh. Markets now expect two 25 basis point increases by March 2027, lifting the federal funds rate to 4.00%-4.25%. This reverses the 2025 ‘debasement trade,’ where investors bet on fiat currency erosion.
Bitcoin, meanwhile, has outperformed gold and silver since February, gaining 30% and 55% against them, respectively, though it remains rangebound near $100,000.