Gold (XAU/USD) and Silver (XAG/USD) prices both declined on Monday, with Gold falling 0.8% to near $4,140 and Silver dropping 0.64% to $62.02 per troy ounce, according to FXStreet data [1][2]. The pullback in both metals comes after Gold failed to extend its three-day rally above the 20-day Exponential Moving Average (EMA) at approximately $4,171, encountering resistance and renewed selling pressure as the US Dollar Index (DXY) rebounded 0.22% to around 101.10 [1].
The recent strength in the US Dollar follows a sharp decline last week, which was triggered by softer-than-expected US Nonfarm Payrolls (NFP) data for June. The US economy added 57,000 jobs, well below the estimated 110,000, prompting traders to slightly reduce expectations for further Federal Reserve interest rate hikes. The CME FedWatch tool shows the probability of at least one Fed rate hike by the end of September at 53.2%, down from 59.4% a week earlier, though markets still anticipate a hike this year [1]. Higher interest rates typically reduce the appeal of non-yielding assets like Gold and Silver [1][2].
Technically, Gold remains below both the 20-day EMA ($4,171) and the 50-day EMA ($4,344), with the Relative Strength Index (RSI) just under 50, indicating subdued bullish momentum. Key support for Gold lies at the June low of $3,941.76, with further downside risk to $3,900 and the September 25 low near $3,722 if this level is breached [1]. For Silver, prices have fallen 12.75% since the start of the year, and the Gold/Silver ratio edged down to 66.80 from 66.89, reflecting a slight outperformance of Silver relative to Gold on the day [2].
Fed Chairman Kevin Warsh, speaking at the ECB Forum in Sintra, emphasized that inflation remains 'too high' and reiterated the Fed's commitment to restoring price stability, suggesting that monetary policy will remain a key driver for precious metals in the near term [1]. No specific analyst forecasts or forward-looking statements were provided for Silver, but both metals are noted for their safe-haven status and sensitivity to US Dollar movements and interest rate expectations [1][2].
CONCLUSION
Gold and Silver prices retreated as the US Dollar strengthened and market expectations for further Fed rate hikes remained in focus. Technical resistance and subdued momentum suggest further downside risk for Gold, while Silver continues to underperform year-to-date. The outlook for both metals will likely hinge on upcoming US economic data and Federal Reserve policy signals.