Gold and silver prices experienced significant declines as escalating tensions in the Middle East and rising oil prices reignited expectations of further US Federal Reserve interest rate hikes. Silver (XAG/USD) dropped 3.50% to trade around $55.75, testing the $55 floor and marking a return to levels last seen in December 2025 and June, now more than 50% below its January record high of $121 [1]. Gold (XAU/USD) fell over 1.80% to $3,994, reaching a new 13-day low of $3,974, with the potential to test the year-to-date low of $3,941 and the October 28, 2025 swing low at $3,886 if the downtrend continues [2].
The declines in both metals were attributed to a rebound in the US Dollar and stabilizing or rising US Treasury yields, following softer-than-expected US inflation data earlier in the week [1][2]. The US Dollar Index (DXY) rose 0.24% to 100.74, supported by a 13% increase in West Texas Intermediate (WTI) oil prices in July, which has heightened speculation of a Fed rate hike later this year [2]. US Treasury yields also moved higher, with the 10-year note rising nearly 3 basis points to 4.577% [2].
US economic data showed Retail Sales expanding by 0.2% month-on-month in June, below May’s 1% increase, primarily due to higher gasoline prices. Control Group Retail Sales slowed from 0.8% to 0.5% as expected. Initial Jobless Claims for the week ending July 11 came in at 208,000, below the forecast of 217,000, and the Fed’s Beige Book described the labor market as strong with "modest, moderate or solid gains" in some districts [2].
Fed officials, including Dallas Fed President Lorie Logan and Kansas City Fed President Jeffrey Schmid, expressed hawkish views, with Logan advocating for a modestly higher policy rate and Schmid noting persistent inflation across a broad range of goods and services [2]. Money markets currently assign a 73% probability that the Fed will hold rates steady at the July meeting, but see a 57% chance of a rate hike in October [2].
Technically, both gold and silver remain in bearish trends. Silver trades below its 50-, 100-, and 200-day Simple Moving Averages, with the Relative Strength Index near 34 and the Average Directional Index around 41, indicating a strong downside bias [1]. Gold faces resistance between $4,125 and $4,175, with further upside targets at the 50-day SMA ($4,305) and 200-day SMA ($4,495), while immediate support lies at $3,900 and $3,886 [2].
CONCLUSION
Gold and silver prices have come under heavy pressure as rising oil prices and renewed Fed rate hike expectations strengthen the US Dollar and Treasury yields. With technical indicators and Fed commentary both skewed bearish, the outlook for precious metals remains negative unless inflation pressures ease or rate hike expectations diminish.