Gold and Silver Under Pressure as Recession Risks and Rate Expectations Mount

Gold (XAU) and Silver (XAG) prices remain under pressure due to rising US Treasury yields. Gold consolidates above $2,950 as higher yields make the non-yielding metal less attractive. The 10-year US Treasury yield has surged to 4.26%, adding further headwinds for gold. Silver is also affected by rising yields and broader market volatility.

Market sentiment turned negative after Wall Street reversed Monday’s gains. The chart below shows that the Volatility Index (VIX) has spiked above 35, driven by high tariffs on China that have reignited concerns over a global trade war. Despite ongoing geopolitical tensions, this environment has weakened demand for safe-haven metals like gold and silver. However, the current price correction in gold appears to be a healthy move, following extremely overbought conditions. Additionally, investors face uncertainty over inflation and monetary policy, which adds mixed signals to the metals market.

The market is waiting for the US Consumer Price Index (CPI) data release, the week’s key event. The US Consumer Price Index (CPI) is projected to decline from 2.8% to 2.5% year-over-year. These lower inflation expectations could limit future rate hikes, potentially supporting gold and silver. However, elevated yields, rising recession risks, and a GDP forecast cut to 0.5% continue to weigh on metals in the short term.

Gold (XAU) Technical Analysis

Gold Daily Chart – 50-Day SMA Support

The daily chart for gold shows that the price is correcting from the resistance zone and approaching the 50-day SMA at $2,950. The support level is also significant due to the mid-line of the ascending channel. However, the RSI has broken below the mid-level, indicating potential downside. Despite this, the overall trend remains bullish, and this correction might present a buying opportunity for traders.

Gold 4-Hour Chart – Ascending Channel Support

The 4-hour chart for gold shows that the price has hit the ascending channel’s support at $2,950. However, the price action shows uncertainty at this level. A break below this support may lead to further downside.

Silver (XAG) Technical Analysis

Silver Daily Chart – Pivotal Support

The daily chart for silver shows a sharp drop from the strong resistance at $35 to the key support zone between $27 and $27.50. This quick decline triggered a rebound, but the price is consolidating to determine its next direction. A break below $27 would signal a negative trend and could lead to further downside. However, the RSI indicates that prices are oversold and may be poised for a positive reversal.

Silver 4-Hour Chart – Targeted Support

The 4-hour chart for silver shows that the price broke below the ascending broadening wedge pattern, triggering a quick drop toward the pattern’s target at $28.70. The price is rebounding from this support zone as the target has been achieved. However, a daily close below $27.50 would be bearish and could signal further downside for silver.

US Dollar (DXY) Technical Analysis

US Dollar Daily – Bearish Pressure

The daily chart for the US Dollar Index shows it remains under bearish pressure below 103.50 and continues to trade toward 100.65. The index trades below the 50-day and 200-day SMAs, indicating a strong bearish trend. A move above 107 may ease the bearish pressure, but that remains unlikely.

US Dollar 4-Hour Chart – Descending Channel

The 4-hour chart for the US Dollar Index shows that it trades within a descending channel. The rebound from the channel’s support took the index up to the resistance at 103.50. However, it failed to break this resistance and continues to trade to the downside.