Is there more room for Gold/Silver to decline?
Gold and Silver Prices Drop as US Treasury Yields Rise
US Treasury Yields Reach a 16-Year High
The prices of gold and silver have fallen below their recent range, which means they are likely to continue dropping in the near future. This is because the yields on US Treasury bonds have been increasing. Last week, the yield on the 10-year Treasury bond reached its highest level in 16 years. This is because people believe that interest rates will stay high for a long time. When interest rates go up, it makes it less attractive to invest in precious metals like gold and silver, which don’t earn any interest.
Why Real Rates Matter
Another reason why gold and silver prices are dropping is because of something called real rates. Real rates are the interest rates adjusted for inflation. When inflation is low and interest rates are high, real rates go up. This makes it more expensive to hold onto gold and silver because you’re not earning any interest on them. So, people start selling their gold and silver and investing in other things that will earn them more money.
What the Fed Governor Said
The governor of the Federal Reserve, Michelle Bowman, also said something that made people think gold and silver prices would drop. She said that she would support raising interest rates even more if inflation doesn’t go up. This means that interest rates could go even higher, which would make it even less attractive to invest in gold and silver.
Gold: Bearish Triangle Triggers
On the technical charts, the price of gold has fallen below an important level of support. This means that the price could continue to drop even further. The next level of support is at a price of 1805, and if it falls below that, it could mean that the price of gold will keep going down. This is important because it could mean that the big increase in the price of gold that we saw earlier this year was just a temporary thing and not the start of a new trend.
Silver: Bearish Head & Shoulders Pattern
The price of silver has also fallen below an important level of support. This has triggered something called a bearish head & shoulders pattern. This means that the price of silver could continue to drop and reach a low of 19.85. This is significant because it suggests that the upward trend in the price of silver that we saw earlier this year has now reversed.
In conclusion, the prices of gold and silver have been dropping because US Treasury yields are going up. This makes it less attractive to invest in gold and silver. Additionally, comments from the Federal Reserve governor and technical chart patterns suggest that the prices of gold and silver could continue to drop in the near future.