The gold price drops below the $2,630 mark, marking the sixth consecutive day of losses for the yellow metal. Investors are awaiting the release of the Federal Open Market Committee (FOMC) minutes and key US inflation data, which are expected to offer clarity on the Federal Reserve’s future rate-cut path. Meanwhile, silver is also under pressure, hovering near the $30 support level as bearish sentiment prevails. Reduced expectations for aggressive rate cuts and easing geopolitical risks have combined to depress both metals. In this article, we will dive into the factors driving the gold price drop and silver’s struggles, including a comprehensive technical analysis.
Key Takeaways:
Gold price drops below $2,630 due to reduced Fed rate cut expectations and easing geopolitical tensions.
Silver is struggling near the $30 psychological support level amid growing bearish sentiment.
Upcoming FOMC minutes and inflation data are key factors influencing the outlook for both metals.
Gold Price Drops Below $2,630: Key Drivers
Gold has experienced sustained selling pressure, with the gold price dropping below $2,630 amid a more cautious outlook on future Fed rate cuts. The market now sees an 85% chance of a modest 25-basis-point cut in November, down from earlier expectations of a larger cut. This has bolstered the US Dollar, which continues to trade near multi-week highs, further pressuring the non-yielding yellow metal.
Another factor contributing to the decline in gold prices is the geopolitical situation in the Middle East. Reports of a potential ceasefire between Hezbollah and Israel have reduced gold's appeal as a safe-haven asset, as the risk of escalating conflict diminishes. This shift in sentiment has driven investors toward other assets, contributing to the ongoing gold price drop.
Technical Analysis: Gold Price Breakdown
From a technical perspective, the gold price drop below $2,630 has raised concerns about further downside potential. The $2,630 level was seen as a key support point within a short-term trading range, and its breach signals a potential continuation of the bearish trend. The next significant support level lies near $2,600, and a sustained move below this threshold could open the door for further declines toward $2,560.
If gold fails to hold above $2,600, the metal could face a deeper corrective move, with the $2,535-$2,530 region emerging as the next support zone. Below this, the psychological $2,500 level could be tested, representing a significant downside risk for gold traders.
On the flip side, any attempts to recover may face immediate resistance near the $2,630-$2,635 region, which now acts as a crucial breakpoint. Further resistance lies near $2,657-$2,658, and only a sustained move beyond this level could trigger a short-covering rally, potentially lifting gold toward the $2,670-$2,672 supply zone. A break above this zone could allow bulls to aim for the all-time high of $2,685-$2,686.
Silver Bears Eye $30 as Downtrend Persists
Silver has followed gold in its downtrend, with the metal struggling to gain any meaningful traction. The $30 psychological level has been acting as a critical support point for silver, but bearish sentiment continues to dominate. Silver has now entered its third consecutive day of losses, with sellers maintaining control over the market.
Technical Analysis: Silver's Bearish Outlook
Silver's technical setup suggests that the metal remains vulnerable to further declines. The repeated failures to break above the $32.00 level have formed a bearish multiple-tops pattern on the daily chart, reinforcing the near-term bearish bias. Oscillators on the daily chart are showing increasing negative momentum, indicating that silver could continue its downward move in the short term.
If silver breaks decisively below the $30.00 mark, it could accelerate the downtrend, with the next key support zone located near $29.75-$29.60. This confluence area is formed by the 100-day and 50-day Simple Moving Averages (SMAs), and a break below this level would confirm a deeper correction, potentially targeting $29.00 and further toward the $28.60-$28.50 support zone.
On the upside, any recovery attempt is likely to face strong resistance near the $31.00 mark, where sellers are expected to re-enter the market. A sustained move above $31.55 would be required to shift the near-term outlook to neutral, with additional hurdles at $31.75-$31.80 and $32.00. Beyond $32.00, silver could aim for the multi-year peak near $33.00, but this scenario appears less likely in the current bearish environment.
FOMC Minutes and Inflation Data: Key Market Catalysts
Looking ahead, the release of the FOMC minutes and upcoming US inflation data will be pivotal in determining the next moves for both gold and silver. Investors are keenly watching the Fed’s stance on rate cuts, as any signs of a more dovish approach could provide relief for gold and silver. On the other hand, if the FOMC minutes and inflation data suggest a cautious approach to monetary easing, the gold price drop and silver’s decline could continue.
The Consumer Price Index (CPI) and Producer Price Index (PPI) reports will also play a critical role in shaping market sentiment. Higher-than-expected inflation figures could bolster the US Dollar, further weighing on both metals. Conversely, a softer inflation outlook may revive hopes for more aggressive Fed rate cuts, potentially triggering a rebound in gold and silver prices.
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