Precious Metals Retreat as Rate Hike Odds Climb

Gold and Silver Retreat as September Rate Hike Odds Climb

(Sept. 10th, 2026) – Precious metal prices pulled back on Thursday after a fresh Producer Price Index (PPI) reading boosted market expectations that the FOMC will vote to raise interest rates at its September meeting. The spot price of gold retreated by just over $80 per troy ounce. Silver took an even harder hit, shedding more than $3.70 per troy ounce and falling below $64/ozt for the first time since August 18th. The price action favored gold, driving the gold-silver ratio higher.

At the center of Thursday’s market-wide pullback is speculation surrounding interest rates. The Producer Price Index (PPI) for the month of August released on Thursday showed that wholesale good prices are on the rise. This increase, 0.4%, fell in line with the median forecast. The big takeaway was the market reaction where interest rate futures are concerned. CME FedWatch revised its projections to a 71.1% probability that the FOMC votes to raise interest rates at next Wednesday’s meeting. That figure is up from 61.2% on Wednesday and 49.4% one week ago.

In the longer term, markets are now pricing more than one cut by the end of the year. CME FedWatch projects a 95% probability of at least one hike before 2026 ends, with a 66.9% likelihood that the Fed decides to raise rates by a total of 50 basis points or more. A more modest end-of-year target of just one 25-point cut sits at 28.1%, with just a 5% probability that the central bank opts to leave rates net unchanged between now and its Dec. 9th meeting. The likelihood of no rate change by the end of 2026 has fallen from 19.2% one month ago and 11.9% yesterday.

Previously, the Federal Reserve found itself in a difficult position due to an apparently cooling labor market and persistent inflation. The Fed’s primary goal is twofold: maximize employment and keep consumer prices down. Raising the federal interest rate can help curb inflation, but raising rates can slow hiring in the job market by raising loan costs for business owners. Alternatively, the Fed can choose to cut rates. While cutting rates can help breath life into the labor economy, doing so typically drives inflation higher by lowering borrowing costs, which can drive consumer and business spending and spike demand for goods and services.

The August U.S. employment report came in stronger than expected, with the U.S. economy adding 162,000 jobs and the unemployment rate holding steady at 4.1%. Combined with the recent PPI data, traders are pricing in a much clearer picture of how the FOMC may respond to the current economic situation. Because inflation appears to be persistent and the job market is stronger than it seemed a few months ago, the Federal Reserve may be ready to begin raising rates in order to curb inflation.

For gold and silver, this makes today’s price action a relatively easy read. The PPI news confirmed that the FOMC is likely to remain worried about inflation heading into its September meeting next week, and the latest data on the employment market shows that the labor market is less of a concern than committee members may have previously thought. This makes a rate hike more likely, and safe haven assets retreated as traders priced in a likely rate cut at next Wednesday’s meeting.

Oil prices also jumped on Thursday, adding a bit more chaos into markets. Crude oil futures crossed $100 per barrel Thursday, gaining more than 8% on the day and bringing month-to-date gains to over 26%. 

Thursday saw crude oil futures cross $108 for the first time in several months after Iran conducted attacks on American naval vessels. Trump said on Wednesday that the war with Iran will likely end after the midterm elections and that oil prices will probably remain elevated until after November.

I think the war’s going to end immediately after the election because they can’t hold out any longer […] Right after the election, oil prices are going to be tumbling downward […] I think it’s going to take a little bit longer than the midterm.

Platinum-group metals also sank on the day’s news. The spot price of platinum fell by more than $119 per troy ounce, tumbling below $1,800/ozt. Palladium lost approximately $72/ozt, lagging behind platinum’s price at just a bit over $1,300 per troy ounce. 

On Friday, traders will be able to review the Consumer Price Index (CPI) for the month of August. The median forecast projects an increase of 0.4% compared to July’s 0.1%. This report could have a major impact on the interest rate outlook, especially if it includes any surprises. While the PPI drove market expectations for a September rate hike higher, the CPI remains one of the Fed’s core measures of inflation. For gold bulls, the ideal scenario is a surprising cooldown in inflation, which could give the Fed a bit of wiggle room to delay hikes until later in the year.

The Federal Reserve’s Federal Open Market Committee (FOMC) will meet next Wednesday to issue its interest rate ruling. Markets could see some volatility leading up to that meeting, especially if we see anything interesting out of Friday’s inflation reading.

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