Table of Contents
Gold, Silver, and Bitcoin Plunge Following Fed’s Hawkish Stance
Gold plummeted as much as 6% on Thursday, with the precious metal acting like anything but a safe-haven asset following the Federal Reserve’s latest policy decision . Investors moved risk-off as the prospects of higher inflation lowered expectations for Fed rate cuts .
Gold futures (GC=F) fell to around $4,600 per ounce, while the broader metals complex was also hammered, with silver (SI=F) and copper (HG=F) dropping 13% and 5%, respectively . Even “digital gold” was battered, with bitcoin (BTC-USD) dropping below $70,000 .
Why the Fed Triggered the Sell-Off
The Federal Reserve held its benchmark interest rate steady in a range of 3.5% to 3.75% and signaled only one rate cut for the remainder of 2026, dashing hopes for imminent monetary easing . This hawkish hold was compounded by a Producer Price Index (PPI) report that came in much hotter than expected, showing wholesale inflation rose 0.7% in February—more than double the estimated 0.3% .
Surging oil prices, now above $100 per barrel amid the escalating Middle East conflict, have pushed up inflation expectations . This has raised concerns that the Fed and other central banks may keep rates higher for longer, making non-yielding assets like gold and other metals less attractive .
Market Reaction
The US dollar (DX=F) strengthened 3% over the past month, adding further pressure on dollar-denominated assets . Since the outbreak of the Middle East war on February 28, gold has fallen roughly 13% .
“The recent break below key technical levels has triggered momentum-driven selling,” as investors cut profitable positions to boost their liquidity, said Ole Hansen, head of commodity strategy at Saxo Bank . “In short, gold’s failure to break higher despite geopolitical stress reflects a temporary dominance of macro and technical headwinds over its traditional safe-haven appeal,” he added .
Silver, a more speculative asset, has declined further since its late January sell-off, trading near a December low of $68 per ounce on Thursday . Bitcoin fell 3% after reaching a February high earlier this week, with ether (ETH-USD) also declining 4% to trade around $2,130 . The crypto market lost more than $100 billion in value over the past 24 hours .
Outlook
Strategists note that while geopolitical risk in the Middle East would normally support gold prices, several offsetting forces are at play. Higher real yields increase the opportunity cost of holding non-yielding assets like gold, reducing its appeal even in a softer nominal rate environment . Gold is up roughly 4% year to date after surging a historic 65% last year .
