Precious metals have come under pressure, with the scale of the declines pointing to deteriorating sentiment ahead of further signals from the Federal Reserve. Gold is down around 0.5%, falling below $4,000 per ounce, while silver drops nearly 2% to around $53.
Expectations for the Fed remain the key driver. Markets expect the central bank to leave interest rates unchanged at its next meeting, but still price in the possibility of another rate hike before the end of the year. High energy prices increase the risk of persistent inflation, which could prompt the Fed to keep rates elevated for longer than previously expected. Such a scenario is unfavorable for gold and silver, which do not generate interest income.
Gold’s breach of the $4,000 level is particularly significant. This psychological threshold could now become resistance, and a failure to recover above it quickly increases the risk of further profit-taking. Silver remains even more vulnerable to volatility. In addition to changes in interest rate expectations, it also responds to the outlook for industrial activity and global economic growth, potentially deepening its losses when market sentiment deteriorates.
The next move will depend primarily on bond yields, the US dollar, and the Fed’s communications. A hawkish message could increase pressure on precious metals, while fading expectations of a December rate hike would create room for a rebound. For now, gold’s break below $4,000 and silver’s steeper decline point to a cautious outlook.
Source: XTB Research
Source: XTB Research
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