Gold, silver fall on stronger dollar and rates

The decline matters because precious metals are highly sensitive to U.S. monetary policy, the dollar and real yields. A stronger greenback makes bullion more expensive for overseas buyers, while the prospect of additional rate hikes raises the opportunity cost of holding non-yielding assets such as gold and silver.

That dynamic is showing up in market gauges as well. SPDR Gold Shares, a proxy for bullion, fell to $375.88 on Oct. 7, down from $382.27 a day earlier and well below its 50-day average of $396.73, while the ETF’s relative strength index slipped to 29.2, a level that points to heavy selling pressure. Silver-related iShares Silver Trust dropped to $53.82, with its RSI at 31.4.

Adalytica’s Gold Fear & Greed Index also flashed “Extreme Fear,” with sentiment at 7, down 17 points in a day and 73 points over the past month. That suggests traders have rapidly turned cautious even after the metal’s run to record levels earlier in the year.

The weakness comes as the 10-year U.S. Treasury yield trades around 5.28% and the market continues to watch the Federal Reserve for clues on the pace of policy easing or tightening. Traders are also weighing the impact of elevated oil prices and a firm dollar on inflation and rates.

For investors, the key risk is that bullion could stay under pressure if yields remain elevated and the dollar holds firm, even as safe-haven demand persists. A softer Fed stance, or signs of slowing U.S. growth, would likely be the next catalyst for a rebound in gold and silver.