Precious metals have retreated sharply from their 2025 highs as markets increasingly anticipate tighter Federal Reserve policy.
Gold and silver have both fallen well below key psychological levels after peaking in January. Gold is down roughly 28% from its high near $5,600 and now trades under $4,000 per ounce, while silver has plunged more than 50%, dropping below $59.
The decline is largely tied to expectations of more aggressive monetary tightening under Federal Reserve Chair Kevin Warsh. Markets are now pricing in two 25-basis-point rate hikes by March 2027, which would lift the federal funds rate to around 4.00%–4.25% amid renewed inflation concerns.
This marks a sharp reversal from 2025’s dominant “debasement trade” narrative—the idea that rising fiscal deficits and mounting government debt would continue to erode fiat currency value.
Bitcoin, by contrast, showed limited upside through much of 2025, hovering near $100,000 even as gold and silver surged. That divergence led some investors to question whether bitcoin still fits within the debasement trade or if its role as a hedge against currency debasement has weakened.
As the broader correction unfolded, bitcoin also moved lower. It is now trading below $62,000—around 50% off its October all-time high—and has slipped beneath its long-term 200-week moving average near $62,800.
One bright spot for bitcoin supporters is its relative performance: since February lows in cross-asset ratios, bitcoin has gained about 30% against gold and more than 55% versus silver.
Even so, all three assets have underperformed U.S. equities in 2026, where gains have been concentrated in semiconductor and memory-related stocks.
