Gold and silver rose last week even as a hawkish Federal Reserve and a sharp jump in US Treasury yields pushed the dollar higher, a combination that has historically dragged both metals lower. Gold broke out of a weeks-long falling wedge to touch $4,400 an ounce, while silver cleared its August downtrend before stalling at resistance near $67.50.
Metals defy a hostile setup
Over the five sessions to Friday, gold rose 0.68% and silver climbed 2.76% even as the two-year US Treasury yield added 9.9 basis points and the dollar index gained 1.11%. That marks a sharp break from precedent. In comparable five-session windows where yields and the dollar rose by at least as much, gold has historically fallen an average of 1.58% and silver 1.79%, based on 640 and 507 prior windows respectively. Gold posted a gain in only 23.8% of those episodes, silver in 30.8%.
The broader yield move was itself unusual. US two-year yields climbed 36.4 basis points over the past 10 sessions, a move ranking near the 95th percentile since 1976, either side of a Federal Reserve meeting where the central bank raised rates for the first time in over three years. Five-year yields rose 30.2 basis points, near the 92nd percentile, while 10-year yields added 21.2 basis points, near the 87th percentile.
Alongside the rate hike, an unusual cross-asset link has emerged. Gold's 10-day correlation with Nasdaq futures rose to roughly +0.79, near the 98th percentile historically, while silver's 20-day correlation with the same futures sits near the 99th percentile. That likely reflects the dominance of the current macro backdrop rather than any fundamental link between metals and tech stocks.
Gold eyes higher targets, silver stalls at resistance
Gold broke higher from its falling wedge on Thursday, then pushed to $4,400 an ounce on Friday before reversing into the close. Beyond $4,400, the next levels in view are $4,510.80, the September 3 high, followed by the 200-day moving average near $4,542 and the 38.2% Fibonacci retracement of the January-to-June bear move near $4,575. A break below the 50-day moving average, or below the September 16 swing low around $4,235, would start to question the bullish bias.
Silver cleared its minor downtrend from the August 28 swing high but reversed just beneath its 100-day moving average after touching $67.50 on Friday. A clean break of $67.50 would put the 23.6% Fibonacci retracement near $70.58, and then the 200-day moving average near $73.15, into view. Support sits around $63.29, where the rising trendline from the July swing low meets the 50-day moving average.
Source: Investing.com
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