Gold And Silver Lose $1 Trillion In A Day As Fed Rate Hike Bets Rise

What Happened

Now, gold slid below $4,200 to its lowest level since early August. The sell-off was still extending at press time.

Why Gold and Silver Are Falling

Fed hike bets. CME FedWatch shows a roughly 70% chance of an October rate hike. Gold and silver pay no interest, so higher rates reduce their appeal.

Market Context

Gold and silver lost roughly $1.05 trillion in combined market value on Monday. Gold fell 2.9%, while silver dropped nearly 5%.

Gold Price Eyes Head-and-Shoulders Target Near $3,943

The price broke the neckline near $4,320 in mid-September. However, it did not accelerate immediately. Gold spent two weeks retesting the $4,300 to $4,400 zone before sellers took control.

The pattern’s measured target aligns with the 0.5 Fibonacci retracement at $3,943. That level sits inside the $3,900 to $4,000 support zone, about 5.2% below the current price. Reaching it could erase roughly $1.5 trillion more.

Silver Price Loses Key $62.87 Support

Why It Matters

Several Fed officials, including Cleveland Fed President Beth Hammack, signaled last week that policy should stay restrictive. The central bank has already hiked rates this year.

The Relative Strength Index (RSI) reads 37 and is falling, leaving room before oversold territory. A daily close above $4,400 would weaken the bearish outlook.

Sellers rejected silver in the $66 to $69 zone three times since late August. That zone includes the 0.618 Fibonacci level at $68.88. Each rejection printed a lower high, suggesting fading buyer strength.

Monday’s candle broke below $62.87, a level that held in June, August, and mid-September. A daily close under it could turn this support into resistance.

A recovery above $62.87, followed by a break of the $66 to $69 zone, would invalidate this outlook.

Friday’s nonfarm payrolls report is the key event. A strong print could lift hike odds and extend pressure on both metals. A weak one may allow a rebound.

Details

Rising bond yields. The 10-year Treasury yield hit 5.20%, raising the cost of holding metals.

A stronger dollar. The US Dollar Index (DXY) hit 101.39, a two-month high. That makes metals pricier for foreign buyers.

Oil and Iran. Stalled US-Iran talks lifted Brent crude to about $107. Higher oil fuels inflation fears and hike bets.

Gold trades near $4,160 after a 2.91% daily drop. The move confirms a head-and-shoulders pattern that formed between mid-August and early September.

Silver fell 4.97% to about $61.11. The steeper drop fits silver’s tendency to swing harder than gold.

The next bearish target is the 0.786 Fibonacci level at $54.51, about 11% lower. Meanwhile, the RSI sits near 40 and trends lower, mirroring gold.

What to Watch This Week

US labor data comes next. ADP payrolls arrive Wednesday, followed by ISM Manufacturing and jobless claims on Thursday.

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