Gold is on track for a fourth consecutive weekly decline, while silver extended its steep selloff after breaking below key technical support levels
Gold and silver prices remained under pressure, with both precious metals heading for weekly losses as a stronger U.S. dollar and expectations of higher U.S. interest rates continued to weigh on investor sentiment.
Gold was on track for a fourth consecutive weekly decline, while silver extended its steep selloff after breaking below key technical support levels. Investors have largely reduced exposure to non-yielding precious metals amid growing expectations that the U.S. Federal Reserve will raise interest rates further this year.
Stronger dollar and rate hike expectations weigh on gold
Spot gold hovered near the psychologically important $4,000-per-ounce mark after briefly falling below the level on Wednesday for the first time since November 2025. The metal was set to lose around 3.2 percent for the week and has declined roughly 29 percent from its record high of $5,594.82 reached in January.
The latest weakness comes as the U.S. dollar index heads for a second straight weekly gain, making gold and silver more expensive for holders of other currencies. At the same time, markets continue to price in tighter monetary policy after inflationary pressures linked to the U.S.-Iran conflict boosted expectations that the Federal Reserve will continue raising interest rates.
Gold, traditionally viewed as a hedge against inflation, becomes less attractive when interest rates rise because it does not generate income, increasing the opportunity cost of holding the metal.
According to the CME FedWatch Tool, traders expect three Fed rate hikes this year, with markets assigning roughly a 64 percent probability of another increase in September.
Silver extends sharp selloff
Silver prices also slipped to around $57 per ounce, extending a steep decline that began in mid-June after the metal repeatedly found support near the $70-per-ounce level. The metal has fallen more than 50 percent from its all-time high, with the post-Federal Open Market Committee (FOMC) sell-off continuing to dominate trading.
The Fed surprised markets with a more hawkish-than-expected outlook, signaling that another rate hike remains likely this year and prompting investors to raise their expectations for tighter monetary policy. Without any major economic catalysts since the Fed meeting, higher real Treasury yields and a stronger dollar have also continued to pressure silver prices.
Among other precious metals, platinum fell 0.3 percent to $1,605.18 per ounce, while palladium rose 1.4 percent to $1,200.75. Despite Friday’s gains in palladium, all major precious metals were on track to post weekly losses.
Investors continue to reduce exposure
Ole Hansen, Head of Commodity Strategy at Saxo Bank, said the precious metals complex remains under pressure as investors continue to cut positions. “Gold and silver continue to trade on the defensive, pressured by a stronger dollar, technical selling and further signs that investors are heading for the exit or reducing exposure,” Hansen said.
On a total return basis, gold is down 8.4 percent so far this year but remains up 18.5 percent over the past 12 months. Silver has suffered a steeper correction, falling 19 percent year-to-date while still holding a 56 percent gain over the past year.
Hansen noted that the latest downturn has largely been driven by the U.S. dollar’s rally following last week’s hawkish Fed message, which revived speculation that interest rates may need to rise further later this year.
“The technical breakdown has further undermined sentiment, forcing additional position reductions despite an underlying macro backdrop that has started to look less hostile over the past week. The main headwinds remain the stronger dollar and continued ETF outflows, while speculative positioning has already been reduced significantly,” he said.
Could the outlook improve?
Despite the recent weakness, Hansen believes some of the factors that triggered the selloff in gold and silver prices are beginning to ease. The sharp decline in crude oil prices has reduced inflation concerns, potentially lowering the need for aggressive Federal Reserve tightening. That shift is increasingly being reflected in Fed funds futures, where expectations for additional rate hikes have moderated, while longer-term Treasury yields have also eased.
However, he cautioned that technical factors continue to dominate price action.
Adding to the pressure, major Chinese banks have reportedly tightened restrictions on retail precious metals trading by freezing new accounts, discontinuing some intermediary trading services and increasing margin requirements to curb speculative activity following the recent surge in market volatility.
The increasingly cautious outlook has also prompted major banks to lower their gold price forecasts. Deutsche Bank cut its third-quarter gold forecast by more than 20 percent to $4,300 an ounce and lowered its fourth-quarter target by 17 percent to $4,800, citing concerns over the U.S. monetary policy outlook and weakening investment demand for bullion.
While both forecasts remain above current prices below $4,100 an ounce, they reflect a notably less bullish stance than before. The revision follows a similar move by Goldman Sachs, which last week reduced its year-end gold price forecast by $500 to $4,900 an ounce after concluding that the Federal Reserve is unlikely to cut interest rates in 2026, underscoring how expectations for higher rates are continuing to cloud the outlook for precious metals.
“For now, the market needs to see ETF selling stabilize and the dollar lose momentum before bargain hunters regain confidence,” Hansen said. “Until then, precious metals are likely to remain driven more by positioning and technicals than by fundamentals.”