Market Update: Sharp Corrections in Gold and Silver Prices
OCBC’s Christopher Wong reported significant declines in the prices of gold and silver as rising yields and a robust US dollar overwhelmed demand for safe-haven assets. Following a previous rally associated with industrial metals and increased risk appetite related to artificial intelligence, silver displayed poorer performance. Wong notes that unless yields prove to be stabilising or pressures from oil prices and geopolitical tensions diminish, there may be near-term downside risks for gold, currently around $4,540.
Consequences for Non-Yielding Metals
Gold and silver experienced considerable corrections leading into the weekend, with silver particularly hard hit following a turbulent week of price fluctuations. Recently, gold prices plummeted by nearly 2.5%, moving towards the $4,500 per ounce mark, while silver fell approximately 9%, dipping below $76 at one point.
The primary drivers of this decline were escalating interest rates, coupled with higher oil prices that reignited inflation concerns, consequently propelling yields and the US dollar upward, thus squeezing the safe-haven demand for non-yielding metals.
Currently, gold is observed at $4,540 levels. Mild bullish momentum on the daily chart has dissipated, and the Relative Strength Index (RSI) has dropped, indicating that risks remain tilted towards the downside for the short term. Key support levels are identified at $4,452 (the 23.6% Fibonacci retracement from the 2026 high to low) and $4,340 (200-day moving average). Conversely, resistance levels lie at $4,670 (the 21-day moving average, 38.2% Fibonacci), $4,730 (50-day moving average), and $4,850 (50% Fibonacci).
Overall, the market sentiment appears fragile unless there are signs of yield stabilisation or if the influences from oil prices and geopolitical concerns cease to trigger hawkish adjustments in rate expectations. Additionally, any positive developments regarding the reopening of the Strait of Hormuz could offer some support to market conditions.
This article has been crafted using an artificial intelligence tool and has been reviewed by an editor.
