Gold and silver prices are expected to decline further in the near term due to rising US Treasury yields. The US Treasury 10-year yield reached a 16-year high, indicating higher interest rates and weighing on the zero-yielding precious metals. The break above the 2018 high of 3.26% suggests that the yield could reach the pre-Great Financial Crisis high of 5.33%. The increase in nominal interest rates and easing inflation expectations have led to higher real rates, making gold less attractive. The recent temporary resolution to avert a US government shutdown has also eliminated safe-haven bids for gold.
On the technical charts, gold has fallen below vital support on the 200-day moving average and may drop towards the February low of 1805. Subsequent support levels are at 1785 and 1720. Despite being deeply oversold on the daily charts, a rebound may not necessarily end the downtrend. A decisive break below 1805 could indicate that the one-year rally since early 2022 was corrective, rather than the start of a new uptrend.
As for silver, it has broken below key converged support and triggered a bearish head and shoulders pattern. The break below the 200-day moving average suggests a reversal of the uptrend from late 2022. The bearish move opens the way towards the March low of 19.85.
