Gold and silver shed approximately $1.05 trillion in total market value on Monday, with gold retreating 2.9% and silver tumbling nearly 5%.
As a result, gold dipped beneath $4,200 to touch its weakest point since the beginning of August. The downward spiral continued to unfold at the time of publication.
| Metal | Market cap before the drop | Drop | Value lost |
|---|---|---|---|
| Gold | ~$30.04 trillion | 2.9% | ~$871 billion |
| Silver | ~$3.65 trillion | 4.97% | ~$180 billion |
| Total | ~$1.05 trillion |
Why Gold and Silver Are Falling
- Fed hike bets. CME FedWatch indicates approximately a 70% probability of an October rate hike. Because gold and silver generate no interest, elevated interest rates diminish their attractiveness.
- Rising bond yields. The 10-year Treasury yield climbed to 5.20%, increasing the expense of maintaining positions in precious metals.
- A stronger dollar. The US Dollar Index (DXY) reached 101.39, marking a two-month peak and making metals more expensive for international purchasers.
- Oil and Iran. Impasse in US-Iran negotiations pushed Brent crude upward to roughly $107. Higher oil prices stoke inflation concerns and expectations of rate hikes.
A number of Federal Reserve officials, such as Cleveland Fed President Beth Hammack, indicated last week that monetary policy should remain restrictive. The central bank has already implemented rate increases earlier this year.
Gold Price Eyes Head-and-Shoulders Target Near $3,943
Gold is changing hands around $4,160 following a 2.91% single-day decline. This movement validates a head-and-shoulders formation developed between mid-August and early September.
The asset breached the neckline near $4,320 during mid-September, though downward momentum did not immediately accelerate. Gold spent a fortnight testing the $4,300 to $4,400 range before sellers seized control.
The technical pattern’s projected target coincides with the 0.5 Fibonacci retracement level at $3,943. That threshold lies inside the $3,900 to $4,000 support region, roughly 5.2% below current valuations. Reaching this target could wipe out an estimated $1.5 trillion more in value.
Meanwhile, the Relative Strength Index (RSI) registers at 37 and trends downward, maintaining distance from oversold conditions. A daily close surpassing $4,400 would undermine the prevailing bearish outlook.
Silver Price Loses Key $62.87 Support
Silver dropped 4.97% to hover near $61.11. This steeper decrease aligns with the metal’s tendency for higher volatility compared to gold.
Sellers rebuffed silver within the $66 to $69 band on three separate occasions since late August. That zone encompasses the 0.618 Fibonacci level at $68.88, with each rejection forming a lower high and signaling waning buyer enthusiasm.
Monday’s trading candle broke under $62.87, a threshold that previously held firm in June, August, and mid-September. Securing a daily close beneath this mark could transform former support into resistance.
The subsequent downside objective is the 0.786 Fibonacci marker at $54.51, representing a decline of about 11%. Concurrently, the RSI hovers close to 40 and points downward, reflecting gold’s trajectory.
A recovery above $62.87, followed by a successful breach of the $66 to $69 corridor, would invalidate this negative projection.
What to Watch This Week
Upcoming US labor market reports take center stage, beginning with ADP payroll figures on Wednesday, followed by ISM Manufacturing data and initial jobless claims on Thursday.
Friday’s nonfarm payrolls release serves as the primary catalyst. A robust job report could amplify rate hike probabilities and prolong downward pressure on both commodities, whereas a disappointing reading might clear the path for a recovery.