Gold Prices Plunge as Silver Soars: What Is Behind the Divergence?
Jakarta, CNBC Indonesia — Gold prices weakened as investors were again unsettled by concerns that US interest rates could rise ahead of next week’s Federal Reserve (Fed) monetary policy meeting.
According to Refinitiv, gold closed at US$4,124.34 per troy ounce on Tuesday, down 0.07%. The decline extended its losing streak to three consecutive days.
Gold prices remained lower on Wednesday. At 6.59am Jakarta time on 21 October 2026, gold was down 0.26% at US$4,113.70 per troy ounce.
Pressure on gold came from the prospect of higher interest rates, which makes interest-bearing assets — particularly US government bonds — more attractive to investors.
“Inflation and Fed interest rates are the main issues weighing on gold at the moment. For now, US Treasuries appear more attractive than gold as a safe-haven asset,” said Bob Haberkorn, senior market strategist at StoneX, as quoted by Refinitiv.
Haberkorn said US$4,000 per troy ounce was a crucial level to watch. Gold’s ability to hold above that threshold would depend heavily on the policy signals delivered by the Fed.
Another Rate Rise Possible in December
The Fed raised interest rates by 25 basis points in September, its first increase this year.
Statements from several Fed officials suggesting there was no urgency to tighten policy further dampened expectations of a rate increase at the 27–28 October meeting. However, markets are still anticipating monetary tightening towards the end of the year.
According to the CME FedWatch Tool, the probability of a rate rise in December is estimated at 92%.
Investors are now awaiting next week’s US Personal Consumption Expenditures (PCE) index data. The Fed’s preferred inflation gauge will provide an important indication of how persistent price pressures are and help determine the next direction for interest rates.
Gold Down 26% from Record High
Interest-rate pressures have kept gold well below its record high. Prices have fallen about 26% from the peak of US$5,594.82 per troy ounce reached in January.
Compared with the level before the Iran war broke out, gold is also down about 22. At the time, fears of a surge in energy inflation strengthened expectations of higher interest rates.
Historically, investors have turned to gold to protect their wealth against inflation. However, gold pays no interest, so it tends to become less attractive when rates are high, especially when government bonds offer more competitive yields.
In Japan, Bank of Japan (BOJ) Governor Kazuo Ueda said underlying inflation in the economy was already close to the 2% target. His remarks opened the door to further interest-rate rises.