Gold and silver markets saw a combined loss of $1,05 trillion in market capitalization on Monday. Gold prices fell by 2,9%, dropping below $4 200, while silver declined by nearly 5% to approximately $61,11. The sell-off follows rising expectations for a Federal Reserve interest rate hike in October, currently estimated at a 70% probability by CME FedWatch.
Macroeconomic factors contributing to the decline include the 10-year Treasury yield reaching 5,20% and the US Dollar Index hitting a two-month high of 101,39. Additionally, Brent crude prices rose to about $107 amid stalled US-Iran negotiations, fueling inflation concerns. Federal Reserve officials have indicated that monetary policy is likely to remain restrictive.
Technical analysis suggests further downside potential for both metals. Gold has formed a head-and-shoulders pattern with a target near $3 943, which could lead to an additional $1,5 trillion in market value losses. Silver has broken below a key support level of $62,87, with a potential bearish target at the 0,786 Fibonacci level of $54,51.
Market participants are now focused on upcoming US economic data releases. Key reports scheduled for this week include ADP payrolls, ISM Manufacturing data, and jobless claims. The nonfarm payrolls report on Friday is considered the primary event that may influence future interest rate expectations and the subsequent performance of precious metals.
