Gold Below $4100, Silver Sub-$60 as US Borrowing Costs Hit 2002 Level

GOLD and SILVER prices fell again Wednesday as long-term interest rates in the bond market rose to fresh multi-decade highs for Western nations, costing the US government − already a record $40 trillion in debt − the highest borrowing costs in more than 24 years.

Already showing "worrying price action" in the Dollar price of gold this week, London quotes fell through $4100 per troy ounce for the first time since 5 August, and silver also hit a new 9-week low beneath $60.

With the US Treasury set to raise $39 billion today in 10-year debt, market yields on existing 10-year bonds reached 5.36% per annum, while its 30-year borrowing cost also hit the highest since June 2002 at 5.72% ahead of tomorrow's auction of $22bn in new long-term bonds.

"It would take governments around the world suddenly becoming fiscally responsible," said 2 of 3 bullion market executives participating Tuesday in global trade association the LBMA's penultimate 2026 conference session in Sorrento, Italy when asked by BullionVault what might break the long-term bull market in gold.

"Watch interest rates," warned the third.

Like gold and silver, global stock markets fell as borrowing costs rose again today, with the EuroStoxx 600 index losing 1.2% as "le spread" between comparable German and French government bond yields widened to more than 1.4 percentage points.

"My message is, get your house in order," said international lender the IMF's Managing Director Kristalina Georgieva to CNBC today when asked about France's surging budget deficit and bond yields amid a wave of protests by children, students, parents and teachers over educational staff shortages and run-down facilities.

Crude oil meanwhile rose 1.9% on December Brent futures but copper edged back, trading 3.8% below last month's fresh record high.

"Inflation is frustrating and must be fixed," said US central banker Jeffrey Schmid of the Federal Reserve's Kansas City district on Tuesday, attributing part of the rise in costs to AI infrastructure spending.

Next scheduled to be a voting Fed policy committee member in 2028, "We have a way to go" to achieving the Fed's 2% goal Schmid said.

Futures market positioning now puts the odds of another rate rise around 1-in-5 for this month's Fed meeting, but above 2-in-3 for December according to data from the CME derivatives exchange's FedWatch tool.

The Dollar meantime rose near September's 17-month high on its trade-weighted DXY index against the West's other major currencies.

That failed to stop the price of gold in UK Pounds falling through £3100 per troy ounce for the first time in 9 weeks, but the Euro price of gold held firmer above last Tuesday's 8-week low, trading at €3665.

Last week Fed vice-chair Philip Jefferson and New York Fed President John Williams both broke with new chairman Kevin Warsh's promise not to give the financial markets any 'forward guidance' by suggesting in separate remarks that they're unlikely to vote for an October rate rise unless US economic and inflation data signal more urgency.

Offsetting the headwind from rising interest rates, the consensus among delegates and speakers at this week's LBMA conference − held in partnership with the LPPM platinum and palladium market association − was that central bank gold buying will continue around or even above recent record levels.

China today announced a 23rd consecutive month of central bank accumulation, buying the most by weight since September 2023.

Representatives of the LBMA are meantime in the High Court in London defending the not-for-profit association against a claim for damages brought by the families of two illegal miners allegedly killed by security forces at the North Mara gold mine in Tanzania, denying duty, control or liability in the case.