Gold Slides for Two Consecutive Days, Gold-Silver Ratio Plunges Nearly 15% in a Month

London spot gold closed down 0.56% on Wednesday, at $4686.99 per ounce, marking a second consecutive trading day of decline. As of press time, the gold price has slightly rebounded, launching a new assault towards the $4700 level. The gold price has corrected by over 16% from its historical high of $5589 set on January 28th this year, reflecting a market repricing of the Federal Reserve's policy path.

The core logic behind the gold price's decline is clear. A surge of 6% year-on-year in the PPI in April, which greatly exceeded expectations, and the ongoing transmission of oil price shocks caused by the Iran war to downstream sectors have fueled a resurgence in inflation expectations. Gold is in an awkward situation—it is typically seen as a hedge against inflation, but a high-interest-rate environment is also its nemesis, as gold does not generate interest, and the opportunity cost of holding gold rises when the risk-free rate increases.

Peter Grant, Vice President and Senior Metal Strategist at Zaner Metals, stated, "The persistent stickiness of inflation has reinforced expectations for a longer period of high interest rates, which is the direct cause of the gold price pressure over the past two days." Current data from CME FedWatch shows that market expectations for a rate cut within the year have been essentially eliminated, with rate hike probability expectations rising to 50%.

News from India further dampened sentiment. On Wednesday, the Indian government announced a significant increase in the import duty for gold and silver from 6% to 15%, covering a 10% base duty and a 5% agricultural infrastructure tax, to alleviate the pressure on foreign exchange reserves. Being the world's second-largest consumer of precious metals, this move immediately sparked market concerns about demand, and Grant believes it will form a long-term resistance for gold prices.

In comparison, other precious metals generally fared well in the red, with gold becoming the outlier in the segment. London spot silver closed up 1.09% on Wednesday, touching a two-month high at one point; platinum rose slightly by 0.17% to $2132 per ounce, reaching its highest point since March 12th; palladium inched up by 0.54% to $1495 per ounce.GoldSilver.com noted that the rapid narrowing of the gold-silver ratio is a signal of industrial demand, rather than a driver of safe-haven sentiment.

There are two main reasons behind silver's strength:

One comes from the demand side. Trump's visit to China this week coincides with China and the US negotiating tariff reductions on about $30 billion worth of goods, and the expectation of easing trade tensions directly boosts the industrial demand outlook for silver. According to the Silver Institute's "World Silver Survey 2026," approximately 60% of annual silver consumption comes from industrial use, with solar photovoltaics alone accounting for 29% of industrial demand, with the entire supply chain heavily reliant on smooth China-US trade relations.

The other comes from the supply side. China accounts for about 70% of the world's silver refining capacity and has implemented silver export restrictions starting from January 2026, directly tightening global supply. Meanwhile, silver has been in a supply deficit for six consecutive years, with the Silver Institute estimating a deficit of 67 million ounces for the year 2026. The easing of trade tensions is the spark, while years of accumulated structural deficits and Chinese export restrictions are the underlying fuel.

Two key variables are worth paying attention to going forward. First, whether inflation expectations can be re-anchored—if persistently high oil prices drive inflation higher, gold's upside potential will be severely capped. Second, whether the China-US summit can produce a substantial tariff reduction agreement—if the negotiation outcome falls short of expectations