Gold Prices Plummet Amid Rising Oil Prices and Higher Interest Rates

Gold and silver prices have taken a significant hit today due to a macroeconomic shockwave triggered by rising oil prices. The sharp increase in Brent crude, which reached $107, has sent inflation expectations soaring. As a result, investors are pricing in higher interest rates, with nearly 94% odds of a December hike and over 70% chance of a second hike as soon as October.

The combination of rising nominal yields and a strong dollar is putting pressure on gold and silver prices. The US Dollar Index (DXY) has reached a two-month high at 101.19, while the 10-year Treasury yield sits around 5.24%. This makes holding non-yielding assets like bullion more expensive for foreign buyers.

Gold's RSI is currently at 35, which suggests it may be approaching oversold territory but not quite there yet. Meanwhile, the dollar's RSI is stretched at 69.2, leaving room for a potential counter-bounce. However, chasing gold prices at this point would come with poor risk.