Metals retreat after growth surprise
Gold and silver both weakened on Thursday, October 29, after US growth data beat forecasts and inflation stayed elevated, strengthening the case for another Federal Reserve increase. Spot gold slipped to approximately $4,010 an ounce, while silver dropped to around $52. The Commerce Department's advance estimate showed annualized third-quarter GDP growth of 3.4%, topping the 3.2% economists had expected. Mining shares also fell, with Peru's Buenaventura, a major silver and gold producer, losing more than 4% in New York trading.[S1][S2]
The GDP figure arrived a day after the Fed, on October 28, kept its target range at 3.75% to 4.00%. The vote came in at 10-2, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of raising rates by a quarter point right away. Policymakers said they required additional information before deciding the right policy stance, and Chair Kevin Warsh would not commit to any December move. Markets had already leaned toward another increase, pricing the odds of a December hike at about 78% to 85%.[S1]
Why non-yielding assets feel the squeeze
Neither metal pays interest, and that is the core of the mechanism. When the Fed is expected to cut, holding an asset with no yield costs little relative to cash. When hike odds rise, every ounce competes with interest-bearing instruments such as Treasury bills. A stronger economy also reduces the appeal of gold as a recession hedge, a theme that had supported October's rally. Gold had traded above $4,000 in recent weeks and touched an intraday high near $4,070 before Thursday's retreat.[S1]
Silver dropped further, a pattern that reflects its tendency to trade more like an industrial metal than gold, which makes its price swings larger in either direction. A one-day loss of roughly 3.5% amid hawkish rate repricing mirrors past episodes, among them a steeper slide in early 2026 as the metal retreated from its own record high. Gold is down 22% from a January peak of about $5,318, while silver has shed nearly half its value from $121.[S1]
Mining shares also moved lower. Buenaventura dropped more than 4%, a bigger loss than gold itself, because weaker metal prices reduce revenue while many operating costs remain fixed. Bank of America expects gold to potentially hit $5,000 an ounce and silver $65 in 2026. Silver traded near $57 in October, well under its January 2026 record above $118.[S1]
Central-bank demand and the December test
The longer-term picture is not uniformly bearish. Reserve managers have added an average of about 1,000 tonnes of gold a year over the past four years as they diversified holdings, though purchases in the first half of 2026 ran at the slowest pace since 2022. Even so, the metal remains highly sensitive to the rate outlook, and Thursday demonstrated how economic releases can harden expectations for tighter policy.[S1]
More US inflation data is due before the Fed meets on December 8-9, and those readings will help decide whether the current pullback is a pause or the beginning of a longer decline. Rate-hike odds for the October 27-28 meeting swung by more than 40 points within two weeks, a reminder of how fast positioning can shift.[S1]
