Gold Loses Its Haven Bid as Oil Shock Revives Rate Fears
Gold is set for a weekly loss of more than 3.5% after falling to its lowest level since July 20. This time, the Middle East conflict is working against the metal. Energy-driven inflation is outweighing its safe-haven appeal, and investors looking for safety are buying Treasuries instead.
Gold: Inflation Fears Trump Haven Demand
Gold fell nearly 3% on Thursday after the New York Times reported that the US and Israel are preparing a short but intense military operation against Iran after the midterm elections, possibly targeting its energy infrastructure. Instead of lifting bullion, the report revived concerns that higher energy prices would keep US rates elevated, RTTNews said.
The flight to safety went to bonds. Worries about the funding needs of AI hit tech stocks and sparked the biggest one-day rally in Treasuries in more than three years, with the 10-year yield falling more than 19 basis points, Reuters reported. Lower yields usually help gold, because the metal pays no interest and holding it costs less when bond returns fall. This time gold failed to attract any haven demand, which shows how heavily inflation worries are weighing on the metal.
That is why policy expectations remain the main headwind. The Fed is widely expected to hold at its October 27-28 meeting after hotter-than-expected consumer and producer inflation data, but CME’s FedWatch tool shows about a 78% chance of at least one hike by December.
Silver: Hit From Both Sides
Silver has fallen more sharply than gold and is down about 10% in October. Because it is both an investment metal and an industrial input, it is exposed to tighter monetary policy and to the growth risks of an energy shock, Business Today noted. Higher crude costs raise the risk of persistent inflation, and they also threaten the manufacturing demand behind silver’s industrial base.
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Next week brings the Fed decision on October 28 and the September PCE inflation data on October 29. Both will show whether the energy-driven rate premium keeps pressure on the two metals.
Gold Technical Analysis: XAU/USD Breaks Below $4,075 as $3,946 Comes Into Focus
Gold is trading near $4,015 on the 4-hour chart after a clean break below $4,075, a floor that had held all month. A falling trendline has capped every rally since late August, and price is now below both moving averages, so sellers remain in control.
The next support is the $3,946 to $3,963 zone, last tested in July. If that zone breaks, the way opens toward $3,890. On the upside, $4,075 is now the first resistance.
RSI is near 26, deep in oversold territory, so a short bounce would not surprise me. Even so, I lean bearish while gold stays below $4,075. A recovery above that level would ease the pressure, while a close below $3,946 would strengthen the selling case.
Silver Technical Analysis: XAG/USD Slides to $53.46 Inside a Bearish Channel
Silver is trading near $54.05 on the 4-hour chart, inside the falling channel that has guided prices lower since September. The latest rejection came near $58.09 at the top of the channel, and the drop that followed took silver to a fresh low near $53.43, just under the $53.46 support, before a small bounce.
If $53.46 gives way on a closing basis, $52.41 and then $51.39 come into play. On the upside, silver needs to clear $54.53 first, then $55.77.
RSI is near 28, so silver is also oversold and a relief bounce is possible. In my view, the bias stays bearish while silver trades below $55.77. A move above that level would ease the pressure, and a close below $53.46 would point to further losses.