Gold (XAU/USD) and Silver (XAG/USD) both faced downside pressure during Asian trading on Wednesday, driven by renewed strength in the US Dollar and elevated US bond yields ahead of the release of the Federal Open Market Committee (FOMC) minutes [1][2]. Gold stalled its modest rebound from a two-month low near $4,100, while Silver traded around $60.90 per troy ounce, remaining below the $61.00 mark [1][2].
The US Dollar's resurgence was attributed to persistent geopolitical uncertainties and a fresh rise in US bond yields, which were supported by ongoing Middle East tensions and energy-driven inflation fears [1][2]. In particular, Saudi-backed Yemeni government forces claimed control over strategic points along the Red Sea coast, while the Iran-backed Houthi group retaliated with attacks on Saudi targets, including an Aramco refinery in Riyadh [1]. Additionally, attacks on tankers in the Strait of Hormuz intensified, with the UK Maritime Trade Operations reporting nine incidents this month, and a Saudi-led coalition intercepted a Houthi ballistic missile targeting Khamis Mushait [2]. These developments contributed to a rebound in crude oil prices, further fueling inflation concerns and keeping US Treasury yields near multi-year highs [1][2].
Market participants are closely watching the FOMC minutes for insights into future US monetary policy. The CME Group's FedWatch Tool indicates that traders are pricing in around an 85% chance of a rate hike in December, while the probability of an October hike stands at roughly 20% [1][2]. Strategists at BNY Markets noted that the shift away from an October move does not signal a material change in the near-term policy path, and they now expect the second hike of this cycle at the end of the year [1]. However, they cautioned that the outlook into 2027 remains uncertain due to the unpredictable impact of the Middle East conflict on oil prices and inflation [1].
Despite China's central bank extending its gold-buying streak for the 23rd consecutive month, this did little to support gold prices amid the prevailing bearish sentiment [1]. For Silver, TD Securities highlighted that trend-following funds remain only modestly engaged, with CTAs holding a small net short position, and identified a key downside trigger level at $60.71 [2].
Technical analysis for both metals suggests a bearish consolidation phase, with gold holding below its 100-period moving average and silver facing potential systematic selling if it breaches key support levels [1][2].
CONCLUSION
Both gold and silver prices are under pressure due to a stronger US Dollar, higher bond yields, and heightened geopolitical risks, particularly in the Middle East. Market sentiment remains cautious ahead of the FOMC minutes, with traders closely monitoring signals for future US rate hikes. The prevailing environment suggests continued volatility for precious metals as macroeconomic and geopolitical uncertainties persist.