On Tuesday, both Gold (XAU/USD) and Silver (XAG/USD) prices declined as US Treasury yields surged to their highest levels since 2007, exerting pressure on non-yielding assets like precious metals [1][2][3][4]. Gold traded at $4,364, down over 1.10%, falling below the 100-day Simple Moving Average (SMA) at $4,384 and losing bullish momentum as the Relative Strength Index (RSI) dipped lower [1]. Silver dropped 2.77% to $63.96, with buyers hesitant to push prices higher amid uncertainty regarding the Federal Reserve's monetary policy path and ongoing Middle East tensions [2]. Technical indicators for both metals suggest fading bullish momentum and potential for further downside, with Gold eyeing support at $4,350 and $4,300, and Silver holding above its 50-day SMA at $61.28 but facing resistance at $64.38 [1][2].
US Treasury yields, particularly the 10-year and 30-year, reached multi-decade highs, with the 30-year yield around 5.3%, its highest since June 2007 [1][3][4]. Despite these elevated yields, the US Dollar Index (DXY) remained flat at 99.60, as similar yield increases were observed across other major economies, neutralizing the currency impact [1][3]. Policy expectations have shifted, with conditional probabilities indicating a 65.4% chance of a hold at the September 16 Federal Reserve meeting and only a 33.0% chance of a rate hike in December, down from certainty just eight days prior [3][4]. This deferral of tightening has removed roughly a third of the terminal tightening from the curve, yet equity markets, including the Dow Jones Industrial Average, have responded by grinding lower, with the Dow trading near 53,400, down about 2.5% from its August 5 record [4].
Economic data released Tuesday showed mixed results: US Housing Starts for July fell 12.4% month-over-month to 1.239 million, missing forecasts and declining from June's 1.415 million, while Building Permits rose to 1.443 million, beating expectations [1][3][4][5]. Industrial Production for July increased 0.2%, just below the 0.3% consensus, and Pending Home Sales dropped 2.3%, marking a second consecutive decline [1][3][4][5]. These figures reflect the impact of higher mortgage rates, which have spiked since the onset of Middle East conflict and elevated home prices [1][4].
Geopolitical tensions remain high, with US President Donald Trump stating that Iran is unlikely to accept Washington's terms to end hostilities and confirming that no talks are scheduled. Tehran insists the Strait of Hormuz will remain closed unless US conditions are met, while Trump claims the waterway is open and all mines have been cleared, highlighting a discrepancy in official statements [1][5]. Crude Oil prices have risen above $85.00, supported by uncertainty in the Middle East, which continues to fuel inflation risks and leaves the possibility of a Federal Reserve rate increase later this year on the table [1][2][3][4].
The US Dollar has retained a mild safe-haven bid, favoring the Greenback over the Japanese Yen (USD/JPY), which edged higher to 159.61. Technical analysis shows USD/JPY holding above key support levels, with resistance at 159.69 and 159.73, and constructive momentum indicated by an RSI of 59.46 [5]. Home Depot (HD) rose about 1% on a second-quarter earnings beat, helping limit losses in the Dow Jones on a day when housing data disappointed [4].
Investors are awaiting Wednesday's release of the Federal Reserve's policy meeting minutes for further insights into the expected path of future interest rates [1][2][3][4].
CONCLUSION
Gold and Silver prices fell sharply as US yields surged to multi-decade highs, reflecting a global repricing of long-term rates and heightened geopolitical risks. Despite a deferral in Federal Reserve tightening expectations, equity and housing markets showed mixed reactions, while the US Dollar maintained a safe-haven premium. The market remains focused on upcoming Fed minutes for clarity on future policy direction.