Precious Metals Buffeted By Higher Interest Rates, Deficits and Geopolitics - Yahoo Finance

AI desk brief

Precious metals have fallen sharply from their late-January 2026 peaks as markets shifted from pricing rate cuts to expecting further tightening. The piece says gold is down more than 20% from the peak, while silver, platinum and palladium are each down more than 40%, with the turn in Fed expectations — including a more hawkish Warsh-led Fed and multiple hikes now priced in Fed funds/SOFR — presented as the main driver.

Despite the selloff, the article argues bullion is still 24% to 100% above early-2025 levels because demand-side supports remain intact: large fiscal deficits, above-target inflation, and geopolitics, alongside ongoing central-bank gold buying. It highlights a projected U.S. deficit of 6.6% of GDP in FY2027, debt-service costs rising from 1.2% to 3.4% of GDP, and high deficits in other major economies, all of which could keep inflation elevated and eventually rekindle support for precious metals if tightening fails to curb prices.