Gold and Silver Plunge Amid Hawkish Fed Expectations, Month-End Flows Loom

The gold and silver markets have come under intense selling pressure at the start of the new trading week, with gold down almost 3% and silver falling over 5%. Gold broke below the key support around $4,225, extending its decline towards a low near $4,143. Silver followed a similar path, breaking below the important $62.30 support before falling towards $60.90.

The renewed selling pressure has been attributed to hawkish Federal Reserve expectations and rising US Treasury yields. However, the scale of the decline in metals has not been replicated across the broader market. Oil is up approximately 3% at the open, while major currency pairs are mostly flat on the day.

Month-end flows and Friday's US Nonfarm Payrolls report could spark a reversal in the market. A stronger-than-expected jobs report would likely reinforce expectations of another Fed rate hike and place additional pressure on metals. However, weaker employment growth or an unexpected rise in unemployment could pull Treasury yields lower, weaken the dollar, and give gold and silver buyers an opportunity to recover.