Gold (XAU/USD) and Silver (XAG/USD) began the week under intense selling pressure, with Gold sliding nearly 3% to around $4,156, its lowest level since August 5, and Silver plunging 4.53% to trade near $61.40 [1][2][3]. The sharp declines are attributed to elevated US Treasury yields and reinforced expectations that the Federal Reserve (Fed) could raise interest rates further, following persistent inflation concerns driven by volatile Oil prices and disruptions in global energy supplies [1][2][3]. The benchmark 10-year US Treasury yield advanced to 5.23%, its highest since 2007, increasing the opportunity cost of holding non-yielding assets like Gold and Silver [1][2].
Money markets are pricing in a 68-70% chance of another Fed rate hike at the October meeting, according to the CME FedWatch tool, following a 25-basis-point hike in September and hawkish comments from Fed officials last week [1][2][3]. The US Dollar Index (DXY) remains near recent highs at 101.16, further pressuring precious metals as investors favor the safe-haven Dollar amid ongoing geopolitical tensions between the US and Iran [1][3]. Despite Gold's traditional role as a safe-haven asset, it is down about 25% from its January all-time high near $5,600, with interest-rate expectations remaining the main driver [1].
Technical analysis across both Gold and Silver confirms a bearish near-term bias, with prices holding below key moving averages. Gold trades below the 50-day, 100-day, and 200-day SMAs, and its Relative Strength Index (RSI) is slipping toward oversold territory at 36 and 35.69, respectively, suggesting downside momentum is softening but not yet reversed [1][3]. Silver trades below the 100-period and 200-period SMAs, with its RSI at 29, indicating oversold conditions but no immediate challenge to the prevailing bearish structure [2]. Key support for Gold is seen at $4,120 and $4,000, while Silver's support is at $60.90 and $60.00 [2][3].
Looking ahead, traders are closely watching a packed US economic calendar, including Personal Consumption Expenditures (PCE) inflation on Wednesday, ISM PMI on Thursday, and Nonfarm Payrolls (NFP) on Friday, as well as further comments from Fed officials for clues on the central bank’s next move [1][2][3]. Analyst opinions suggest that unless there is a significant shift in economic data or Fed rhetoric, the bearish phase for precious metals may persist, with sellers targeting $4,000 for Gold and a critical floor at $60.00 for Silver [2][3].
CONCLUSION
Gold and Silver have suffered steep declines as rising US Treasury yields and expectations of further Fed rate hikes diminish their appeal. With the US Dollar strengthening amid geopolitical tensions and upcoming economic data likely to influence Fed policy, precious metals remain vulnerable to further downside. Market participants are awaiting key US economic releases and Fed commentary for potential shifts in sentiment.