Gold and Silver Face Bond Selloff Pressure Amid Fed Rate Hike Hopes
Gold prices are facing a tug-of-war between hopes of a Federal Reserve rate hike pause and a renewed bond market selloff. September’s U.S. employment data, showing just 29,000 nonfarm payroll jobs added, has slashed expectations for an October rate increase to 23%, with slightly higher odds for November and December. However, the bond market is under pressure, with 10-year and 30-year Treasury yields hitting 24-year highs due to inflation, heavy government borrowing, and a stronger dollar.
Despite these headwinds, gold’s structural demand remains strong. Speakers at the London Bullion Market Association conference highlighted gold’s role as a reserve diversifier amid geopolitical fragmentation and rising sovereign debt. Central bank purchases are forecasted to reach around 720 tonnes by 2026.
Technically, gold is testing $4,112 support after failing to break above $4,160. The broader trend is bearish, with key support levels at $4,073 and $4,030, and resistance at $4,160, $4,190, $4,214, and $4,238. The RSI indicates weak momentum, suggesting further downside if resistance holds.
Silver is also feeling the pressure from USD and interest rate dynamics. The Silver Institute predicts a sixth consecutive annual deficit by 2026, despite a 1.5% increase in global supply. Physical investment demand is expected to rise 20% to 227 million ounces, while solar consumption declines. Other sectors, including AI infrastructure and automotive, are driving silver demand.
Technically, silver is holding $59.96 support but remains below a descending trendline. Resistance is at $61.72, with further support at $58.94 and $57.64. The RSI is neutral, and the bearish bias remains as long as silver stays below $61.72.