Gold, silver, and Bitcoin($BTC ) prices took a significant hit on Wednesday as investors reassessed their expectations regarding the US Federal Reserve's monetary policy and the risk of another interest rate hike this year, CNBC reports. Spot gold dropped about 2.4%, settling at $4,161 per ounce, while US gold futures lost over 2%, hitting $4,195 per ounce. Silver slid around 2%, down to $64 per ounce, and Bitcoin fell approximately 1.3%, nearing the $61,000 mark. The decline follows recent economic data from the United States, which fueled fears that high inflation will compel the Fed to maintain a tight monetary policy for an extended period. According to financial markets, there’s still over a 98% chance that the Fed will keep rates unchanged at this month's meeting. However, investors now estimate about a 40% likelihood that the American central bank will hike rates by the October meeting. Pressures on precious metals were amplified by rising bond yields and a strengthening US dollar. Simultaneously, the escalation of conflict in the Middle East has driven up oil prices, increasing inflationary risks. Analysts believe the market is currently more focused on interest rates and inflation rather than gold and silver's role as safe-haven assets. In addition to precious metals, mining stocks and ETFs linked to gold and silver also experienced declines in Wednesday's trading. Solid US labor market data released last week contributed to a shift in investor sentiment and bolstered expectations for a potential further tightening of monetary policy. Market experts say that the current correction is affecting multiple asset classes simultaneously and reflects a broad process of reducing risky exposures and credit-based positions. Despite the recent pullback, some analysts believe that the long-term outlook for gold remains favorable, supported by central bank purchases, diversification of currency reserves, and the possibility of a weaker US dollar in the future. However, analysts warn that gold could still lose about 20% of its value by fall if interest rates and bond yields continue to rise.
