Gold, Silver Sink as Bond Yields Jump on Bessent and Trump's Debt

GOLD and SILVER sank in London trade Thursday before rallying after testing 2-week price lows in all major currencies as the European Central Bank raised its key interest rates but stayed well below inflation and long-term borrowing costs leapt in the bond market and US President Trump promised a $5,000 "dividend" for every American adult if his Republican Party win this November's mid-term elections.

With US federal debt now topping $40 trillion, larger by 1/10th since he returned to the White House, Trump's offer would cost $1.3 trillion if the Republicans win both the House of Representatives and the US Senate − a race in which they currently trail the Democrats by nearly 6 percentage points on latest opinion polls.

Seeking to curb long-bond borrowing costs, US Treasury Secretary Scott Bessent yesterday raised the size of a bond buyback to $6 billion from the $4bn announced 3 weeks ago, already twice the previous long bond buybacks ceiling.

But instead of supporting bond prices and pushing down bond yields, Bessent's repurchase saw the market continue to sell off on Thursday, with stronger-than-expected US inflation and jobs data pushing up the yield demanded by investors to buy benchmark 10-year Treasury debt as high as 4.93% per annum.

That's less than 10 basis points beneath late-2023's bond yield peak, the highest borrowing costs for Washington since 2007, back before the global financial crisis, at just above 5% per year.

Gold priced in the Dollar had already lost $65 per troy ounce from last night's rally above $4400 by the time of Thursday's ECB rate-rise decision.

Gold then sank again, down to $4324 within 3 minutes of new US data putting Producer Price inflation above analyst forecasts for August at 5.4%, before reversing that $40 plunge.

"The conflict in the Middle East continues to generate inflation pressures, and inflation is set to remain well above target for an extended period," said the ECB after raising its deposit rate for commercial banks by 25 basis points to 2.50% at its September meeting in Berlin.

Inflation across the 21-nation Euro area last month hit a 3-year high of 3.3%.

Crude oil prices have now risen 5 sessions running, touching the highest since mid-May today above $105 per barrel of Brent as Iran-backed Houthi rebels in Yemen seized control of south-west city Mocha near the Red Sea's crucial shipping route through the Strait of Bab el-Mandeb.

Silver also sank with gold Thursday as separate US data said both initial and continuing claims for jobless benefits keep running near multi-decade lows, dipping through $64 per troy ounce after topping $68 on Wednesday.

"I am the house now...and you can bet against me if you want," said Treasury Secretary Bessent earlier this week of the USA's recent, massive intervention to boost the Japanese Yen from 4-decade lows versus the Dollar on the currency market.

Platinum sank as well Thursday, down 6.3% from yesterday's 14-week high near $1930 per troy ounce, while palladium − which also finds its single largest use in autocatalysts to reduce fossil-fuel engine emissions − fell to dip through $1300 after hitting $1469 at the end of August.

Now showing strong positive price correlations with each other, "Precious metals markets are moving in tandem," said Edward Sterck, Director of Research at the mining industry's World Platinum Investment Council on Wednesday, launching their latest quarterly demand and supply report.

That means "the macro overlay is what's moving" the price of industrially-useful platinum rather than the precious metal's own fundamentals, now projected by WPIC to show a deficit of supply versus demand in the back half of 2026.