Gold and Silver Prices Tumble Amidst Tech Sell-Off and Rate Hike Fears

Gold and silver tumbled on Tuesday, as a global sell-off in tech stocks stoked by fears of higher interest rates spilled over into metals.

Gold futures fell 1.5% on Tuesday to $4,142 an ounce, while silver futures tumbled over 5% to $61.80 an ounce, before paring some losses to settle around $62.25.

Since the outbreak of the U.S.-Iran war on Feb. 28, gold's reputation as a safe-haven asset in times of turmoil has come under pressure as some of the drivers behind its ascendance have been called into question.

An unexpectedly hawkish Fed meeting chaired by Kevin Warsh last week boosted expectations for a year-end interest rate ⁠hike, further pressuring gold prices, as the prospect of higher interest rates tend to weigh ‌on the non-yielding precious metal.

Meanwhile, Wall Street is also changing its tune on gold, after several banks downgraded their price forecasts on the metal following Warsh's first meeting.

Bank of America's previous $6,000 target for an ounce of gold looks unlikely now, because the inflation backdrop remains "uncomfortable," likely driving tighter monetary policy, its commodity strategist Michael Widmer wrote on Friday.

Deutsche Bank wrote in a note published Tuesday that "hawks are driving out bulls" in the gold market, revising its price target to $4,300 an ounce in Q3 if the Fed stays on hold, while outlining the risk that three to four Fed hikes could take gold as low as $3,800 an ounce.