Gold and silver retreat as increasingly hawkish Fed expectations drive the dollar higher

Outside Market Developments: The UN General Debate began under the theme of restoring trust and making the UN more effective. UN Secretary-General António Guterres gave his final address, urging regulation of AI, an end to ongoing wars, stronger climate action (“polluters must pay”), a two-state solution for Israel-Palestine, and reforms to UN institutions.

President Trump’s speech focused heavily on the nearly seven-month U.S.-Iran conflict: he called for the complete economic isolation of Iran, framed a stark choice between a deal that would let Iran “rebuild” or “annihilating” the Islamic Republic, and predicted a possible settlement after the U.S. midterms.

U.S. and Iranian officials held indirect talks on the sidelines, which Trump described as “very good” and productive. Iran reiterated conditions, including lifting the U.S. naval blockade, releasing frozen assets, and ending hostilities; it signaled a willingness to reopen the Strait of Hormuz relatively quickly if its demands are met.

Further talks are likely, and the prospect of de-escalation weighed on oil. Brent crude fell below $100 for the first time in two weeks, but is firmer today.

On Tuesday, U.S. President Donald Trump, Danish Prime Minister Mette Frederiksen, and Greenland Prime Minister Jens-Frederik Nielsen signed a trilateral security agreement at the UN in New York. The deal expands the U.S. military footprint on Greenland – including two new bases – while affirming Danish sovereignty and Greenland’s right to self-determination, effectively ending the earlier standoff over potential U.S. annexation.

President Trump personally welcomed Chinese leader Xi Jinping at Joint Base Andrews today as Xi began a three-day state visit to Washington – his first in 11 years – setting the stage for high-stakes talks. The leaders are expected to discuss trade, rare earths, AI cooperation, and geopolitical flashpoints including Iran and Taiwan, with formal summit meetings scheduled for Thursday.

This week’s Fed speakers have struck a consistently hawkish tone following last week’s rate hike. Chicago Fed’s Austan Goolsbee warned that persistent supply shocks (from energy and tariffs) may require a “painful” response. Meanwhile, Boston Fed’s Susan Collins and Richmond Fed’s Tom Barkin both backed further tightening if inflation risks remain elevated, helping push market expectations for at least one more rate hike by year-end to 91.7%.

Amid the hawkish FedSpeak, U.S. yields remain elevated (10-year near 5%), driving the dollar higher. The dollar index has reached eight-week highs above 101.



U.S. rate hikes widen the already large interest-rate gap with Japan, putting fresh downward pressure on the yen and making Tokyo’s interventions (that the U.S. participated in last month) less effective. Every hawkish Fed signal risks undoing the temporary support Japan and the U.S. bought through costly currency market operations.

U.S. stocks are mixed to modestly lower after the Nasdaq’s recent record highs, with the rate outlook and dollar strength providing a headwind. Oil price volatility and uncertainty around the start of the Trump-Xi summit are also keeping investors cautious.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$42.68 (-0.98%)
5-Day Change: +$48.57 (+1.14%)
YTD Range: $3,945.52 - $5,595.02
52-Week Range: $3,717.65 - $5,595.02
Weighted Alpha: +7.82

Gold has fallen to fresh lows for the week as hawkish FedSpeak drives expectations for at least one more rate hike this year, lifting the dollar to two-month highs. While the yellow metal remains confined to last week's range, the $4,235.99 low is looking vulnerable.



The convergence of the 100-day and 50-day moving averages at $4,312.84/$4,306.40 is important support today, particularly on a close basis. A close below this key zone would suggest potential to the $4,232.32 retracement level.

Persistent central bank buying should keep the summer lows below $4,000 at bay. China has been particularly relentless with the PBoC on a buying spree of 22 consecutive months.

China has already imported more than 1,000 tonnes of gold in the first eight months of 2026, surpassing its entire 2025 total. This structural, rate-insensitive demand from both private investors and the central bank is helping put a higher long-term floor under prices even as the Fed tightens and the dollar strengthens.

Recent tests of the upside stalled ahead of the declining 20-day MA, leaving several tiers of chart resistance ahead of the indicator at $4,376.33. It would take a short-term close above the 20-day to provide some encouragement to the bull camp, and call for a retest of last week's high at $4,399.30. Above the latter, the midpoint of the Aug/Sep range at 4466.15 would be in play.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$1.863 (-2.78%)
5-Day Change: +$2.145 (+3.41%)
YTD Range: $54.778 - $121.630
52-Week Range: $43.679 - $121.630
Weighted Alpha: +24.62

Silver is off more than 3% intraday, weighed by heightened rate hike expectations and a stronger dollar. For now, the white metal continues to coil in the upper half of the Jul/Aug range.



Silver has been unable to sustain recent probes above the converging 100-day and 20-day moving averages at $65.549 and $66.196, respectively. This leaves the rising 50-day MA at $63.434 vulnerable to a challenge. Penetration would set up a retest of last week's low at $62.331, although a close below the 50-day would embolden the bears and signal potential to the $61.015 Fibonacci level.

A rebound above the 100-day is needed to ease pressure on the downside somewhat and return focus to the highs from the previous two sessions at $67.513/529. The high from 9-Sep at $68.314 still needs to be negated to clear the way for further tests above $70.

Despite the consolidative tone that has emerged, the longer-term supply/demand dynamics remain broadly supportive.  The highlights are a persistent structural supply deficit – now in its sixth year – combined with robust industrial demand tied to electrification, solar power, and AI infrastructure.

Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.