Gold And Silver: $1.05 Trillion Wiped Out In A Single Day

Gold and silver lost about 1,050 billion dollars in market value on Monday, weighed down by bets on a new Fed rate hike. Caught between a strong dollar and high bond yields, bitcoin also dropped.

Gold under 4,200 dollars, 1,050 billion erased

Gold fell 2.9%, below 4,200 dollars an ounce, its lowest since the beginning of August. The yellow metal had been under pressure for weeks. Silver plunged nearly 5%, around 62 dollars, breaking a threshold held since June. In total, about 1,050 billion dollars in market value evaporated, according to BeInCrypto.

This decline is due to the very nature of these assets, which pay no interest or dividend. When bond yields rise, their opportunity cost increases. The 10-year US Treasury evolves at 5.20%, and a strong dollar further increases the cost of buying metals for foreign investors.

Platinum and palladium each lost about 2%. Gold remains far from its record: it still trades about 25% below its January peak.

The Fed, oil and the dollar in the background

The trigger of the day is oil. Brent trades around 107 dollars a barrel, after Donald Trump rejected an Iranian proposal on the Strait of Hormuz, and crude oil has gained nearly 70% this year. This surge fuels inflation fears, thus tightening bets: the markets estimate nearly a 70% probability of a rate hike 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 another hike in 2026, and Beth Hammack, president of the Fed of Cleveland, reiterated on Friday that monetary policy must remain restrictive.

Bitcoin did not act as a refuge

Bitcoin followed the move: according to CoinGecko data, it trades around 82,700 dollars, down about 2.6% over twenty-four hours. The storm is therefore sweeping through all non-yielding assets, from metals to cryptos.

Last week, bitcoin had shown resilience: it was above 84,000 dollars while the dollar was rising, an unusual configuration between two often opposed assets. Bitcoin’s history is marked by such chills; in 2022, the previous tightening cycle already battered it.

The outcome will depend on the same variable for everyone. The markets await US employment figures, with the ADP survey on Wednesday and the official report on Friday. A disappointing figure could ease rate hike bets and offer relief to metals as well as bitcoin. A strong figure would do the opposite. Meanwhile, bitcoin holds the support between 81,000 and 83,000 dollars, already identified last week.