Gold (XAU/USD) and Silver (XAG/USD) prices both declined on Monday following hawkish comments from Federal Reserve Chair Kevin Warsh last Friday, which reignited speculation of a possible rate hike at the September Fed meeting [1][2]. Gold retreated by approximately 0.40%, trading at $4,432 after reaching a daily high of $4,472, while Silver was down 0.23% at around $66.25, after a sharp 4.11% drop on Friday [1][2].
Warsh emphasized the Fed's commitment to tackling high inflation, stating that the central bank still has 'work to do' if prices remain elevated, even if it does not target the 2% inflation goal [1][2]. These remarks pushed the US Dollar Index (DXY) to a one-week high of 99.72 on Friday, though it later retreated to 99.42–99.44 on Monday [1][2]. Market expectations for a September rate hike increased, with money markets pricing in at least 26 basis points of tightening by year-end and the probability of a September hike standing at 64% according to Prime Terminal and 65% according to the CME FedWatch Tool [1][2].
Rising oil prices, driven by renewed conflict in the Middle East and US-Iran tensions, also contributed to higher US yields and inflation expectations. West Texas Intermediate (WTI) crude rose 2.50% to $85.62, further pressuring precious metals as the US 10-year Treasury yield climbed to 4.706% [1].
Technically, gold remains trapped between its 100- and 200-day Simple Moving Averages (SMAs) at $4,370 and $4,528, respectively, with sideways price action and a 'doji' candle indicating indecision [1]. Silver has fallen below its 100-day SMA, with the Relative Strength Index (RSI) and MACD suggesting fading bullish momentum and a consolidative phase [2]. Key resistance and support levels for both metals are outlined, with gold needing to reclaim $4,500 for a bullish move and silver facing resistance at $67.16 and support at $64.79 [1][2].
Looking ahead, the US economic calendar is busy, featuring ISM Manufacturing and Services PMIs, JOLTS Job Openings, Initial Jobless Claims, and Nonfarm Payrolls, all of which could further influence Fed policy expectations and precious metals prices [1].
CONCLUSION
Both gold and silver faced downward pressure as hawkish Fed commentary and rising oil prices fueled expectations of higher US interest rates. Market participants are closely watching upcoming US economic data for further clues on Fed policy, with precious metals likely to remain sensitive to shifts in rate hike probabilities and inflation outlook.