Theme of the day: Gold and Silver Under Pressure as Dollar Strength and Rate Concerns Weigh

Gold and silver remain under pressure as key support levels come into focus, while the US dollar continues to strengthen. Geopolitical uncertainty, renewed inflation concerns and uncertainty around the Federal Reserve’s next steps are creating a difficult short-term environment for precious metals. Geopolitics remained a major market driver last week. The Trump-Xi summit resulted in a two-month extension of the US-China trade truce, while the US-Iran conflict remained unresolved. Continued tensions surrounding Iran have kept crude oil prices elevated, once again raising concerns about inflation. For precious metals, this creates a difficult combination: geopolitical uncertainty can support demand for safe-haven assets, but higher oil prices may reinforce inflation expectations and keep pressure on interest rates. At the same time, a stronger US dollar and elevated Treasury yields continue to weigh on gold and silver. The USD Index remains above 100, reducing some of the near-term appeal of precious metals. Strong US economic data and hawkish commentary from Federal Reserve officials have also reinforced expectations that interest rates may remain higher for longer. This follows last week’s Fed rate increase to 3.75–4.00%, while comments from regional Fed presidents have maintained a relatively hawkish tone. Market positioning has also weakened. Global gold ETFs recorded their first weekly outflow since mid-July, futures investors reduced net long positions and options markets have turned relatively bearish in the near term. The approaching US midterm elections add another layer of uncertainty, with markets watching which party will control the House and Senate and what that could mean for future legislation and fiscal policy. Another risk is forced liquidation. When markets move rapidly, margin calls, stop-loss selling and reduced dealer risk appetite can accelerate declines. This means that even fundamentally attractive assets can sell off sharply when investors need liquidity. The key question is whether the current move represents genuine capitulation, or whether further selling pressure remains ahead. EFPs, ETF flows, options volatility and physical demand will therefore be important indicators to watch for signs of stabilization. China’s Golden Week, running from 1–7 October, could provide some seasonal support. The holiday period traditionally marks the beginning of China’s peak gold-buying season, with stronger jewellery sales, increased restocking activity and firmer local premiums. Chinese gold jewellery demand has been relatively weak so far in 2026 due to elevated gold prices and weak consumer confidence, but recent price stability and holiday spending could unlock some postponed demand heading into year-end. The Federal Reserve’s next steps are likely to remain one of the most important drivers of gold market sentiment. Upcoming US inflation and labour-market data will therefore be closely watched. Expected changes in August PCE inflation and September employment growth could influence expectations for the Fed’s future rate path, with the employment data potentially having greater impact due to its more recent timing. Geopolitical developments also remain important, particularly as US-Iran tensions continue to influence oil prices and inflation expectations. Technical outlook: Gold is approaching several important levels. A sustained break below $4,231/oz would mark a clearer move below the 55-day moving average and could signal a more meaningful increase in downside pressure. Below this, support is seen at $4,203/oz, followed by $4,196/oz, with the more significant downside area around the year-to-date lows of $4,000–$3,943/oz. On the upside, initial resistance is around the 13-day exponential moving average at $4,330/oz. A move above last week’s high of $4,400/oz would help ease the immediate downside bias, while stronger resistance is seen around the 200-day moving average at $4,542/oz. The short-term outlook for precious metals remains highly dependent on the interaction between the US dollar, Treasury yields, Fed expectations, geopolitical developments and physical demand. With gold approaching important technical support and positioning becoming less bullish, the coming sessions could determine whether the current weakness develops into a deeper correction or begins to stabilize.