Gold and silver are supposed to protect against inflation. So why are both metals tumbling instead?

By Michael Kramer

Charts show the potential for more pain ahead. Blame a stronger dollar and looming Fed rate hikes.

Gold and silver prices have slumped this year.

A triple combo of unfavorable economic data has sent interest rates and the dollar on a run higher since Nov. 6, with the jobs, CPI and PPI reports all suggesting a strong labor market and inflation that won't slow down. It gives the Fed a reason to raise rates again at its December meeting, and the potential to signal even more rate hikes in 2027. This will not be good for gold or, for that matter, silver.

It may come as a surprise, because gold is often seen as a safe-haven asset. But even with all the geopolitical tensions and uncertainty this year, gold has performed horribly. Additionally, both silver and gold can be thought of as inflation hedges, but again, even with inflation running near 4%, neither is working as intended.

Gold's struggles may grow worse

Gold (GC00) has held strong around $4,000 for some time but has fallen from a peak around $5,500 at the beginning of the year, and has more recently started to show signs of cracking. It is hard to look at the technicals and point to a level, but there is an identifiable region between $3,900 and $4,000 that, if broken, could lead the metal to slip even further, potentially falling to around $3,600. That is the next area of support on the chart, formed in September 2025, when it consolidated sideways for nearly a month before breaking out to a higher level.

Daily gold price movement since July 2025 with horizontal support and resistance lines, accompanied by an RSI indicator at the bottom.

For the most part, gold has traded inversely to the dollar for some time and has carried an inverse 60-day correlation between the two. Unless the relationship between gold and the dollar changes, economic data that continues to point to a more hawkish Fed, which results in interest rates and the dollar both rising, likely means that gold prices can continue to fall, and that the technical support in the $3,900 to $4,000 range is not likely to hold.

Comparing the U.S. Dollar Index and gold prices since July 2024, with a correlation indicator at the bottom.

Silver has problems too

Silver prices (SI00) have also been falling noticeably and have just dipped back below $50, which means the support level that previously held for silver appears to be breaking too. With support breaking, the metal could also head lower soon, with the next support region around $46.50. The problem for silver is that if it does not hold, the next support region would not come until about $40.

Daily silver price movement with horizontal support and resistance lines since March 2025, accompanied by an RSI indicator at the bottom.

Like gold, silver has also had a strong relationship with the U.S. Dollar Index DXY and an inverse relationship with the 2-year Treasury rate BX:TMUBMUSD02Y, which reflects the market's expectations for future Fed rate hikes. The inverse relationship between silver and the 2-year started to invert around the end of February, when oil prices spiked, and the market began to anticipate higher inflation and the Fed tightening monetary policy. That was also around the time silver started to trend lower after its initial peak in early 2026. So much for it being an inflation hedge.

Comparing the 2-year Treasury yield (green line) and silver prices (black line) since May 2024, alongside an RSI indicator and correlation graph below.

Safe havens and inflation hedges? Not so much.

It's ironic, because both metals can be seen as inflation hedges or even safe-haven assets during periods of market volatility and geopolitical tension. Neither is working as such because we're now seeing the market repricing the path of monetary policy and responding to higher inflation rates. Additionally, because the market expects the Fed to tighten policy, and policy paths between the Fed and other central banks appear to favor the Fed potentially tightening more, the dollar is growing stronger. So at least for now, that safe-haven status is not working.

Overall, this means investors should understand the relationships and sensitivities across asset classes when thinking about an asset's role. If the Fed were going to allow inflation to run hot and not act, the dollar would likely be sinking, and rates wouldn't be rising, and gold would likely be at higher prices. However, rising rates and a stronger dollar would indicate the market is pricing in a Fed that tightens policy.

If that were to change for some reason, gold and silver may rebound. But right now, the macro forces appear to be working against both metals.

Michael Kramer is the founder of Mott Capital Management and a long-only investor focused on macroeconomic themes. He analyzes long-term macro trends and short-term market risk using technical analysis, fundamentals and options-market positioning. See here for further disclosures.

-Michael Kramer

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11-15-26 0730ET