Gold and silver continue to face headwinds from dollar strength and elevated yields

OUTSIDE MARKET DEVELOPMENTS: The market has significantly reduced expectations of another rate hike in October, following last week's disappointing jobs report for September. Additionally, the Fed's favored measure of inflation for August came in cooler than expected.

Fed funds futures suggest the probability of steady policy at the next FOMC meeting now stands at 78.4%, that's up from 29.1% a week ago. While diminished, the market still sees a strong probability (84.8%) of at least one 25 bps rate hike by year-end.

U.S. Treasury yields remain elevated today, with the 10-year note hovering near 5.25-5.28%, close to multi-year highs amid ongoing fiscal and inflation concerns. The dollar index hit fresh 18-month highs in overseas trading before moderating somewhat. The greenback is supported by relative U.S. economic strength, the still-hawkish Fed tilt, and generally attractive interest rate differentials.



Iranian Foreign Minister stressed on Sunday that there is “no military solution” and only fair negotiations can end the war, while warning of a stronger response to any renewed confrontation. Meanwhile, Washington is maintaining its focus on economic pressure and a blockade of Iranian ports amid stalled diplomacy.

Brent crude is modestly easier to start the week but is still above the pivotal $100 level amid the diplomatic stalemate between the U.S. and Iran and ongoing attacks on shipping in the Strait of Hormuz. However, gains have been capped by potential coordinated releases of emergency crude reserves by G7 nations.

ISM Services PMI eased to 54.9 in September 2026 from 55.4 in August, signaling continued expansion in the service sector but at a slightly slower pace than expected. While key sub-components like business activity and new orders remained resilient, rising input cost measures indicated persistent inflationary pressures.

The market is also looking forward to the release of the September FOMC minutes for clues on the path of interest rates after soft jobs data reduced October hike odds. Attention will also turn to the early stages of earnings season, ongoing movements in elevated Treasury yields and oil prices, and other data such as jobless claims and consumer sentiment.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$2.94 (+0.07%)
5-Day Change: +$45.80 (+1.11%)
YTD Range: $3,945.52 - $5,595.02
52-Week Range: $3,884.61 - $5,595.02
Weighted Alpha: -2.00

Gold has been unable to sustain intraday gains and remains generally defensive in the wake of Friday's weaker-than-expected jobs report. While another rate hike in October is looking less likely, the probability for further tightening before year-end remains elevated, keeping yields and the dollar underpinned.



A breach of last week's low at $4,111.49 would put the $4,106.19 Fibonacci level to the test. If the latter gives way, scope would be for a downside extension to the August low at $4,022.62. Minor intervening barriers are noted at $4,065.84 and $4,043.54. While I still believe the summer low at $3,945.52 will remain intact, amid structural underpinning, confidence in that scenario will erode with each successive breach of support.

On the upside, Friday's high at $4,225.02 must be cleared to return focus to the late-September congestion band around $4,300, where important moving averages have converged. A close above the still-climbing 50-day MA at $4,327.72 is needed to confirm a more favorable short-term tone.

Metals Focus forecasts that despite near-term headwinds from high U.S. inflation and rising interest rates, gold will reach new record highs in 2027 with an annual average price of $5,330. They believe strong investment demand, U.S. debt concerns, persistent geopolitical risks, and sustained central bank buying will remain the key drivers supporting gold.

According to Nikkei Asia, Asian gold-producing countries are taking steps to keep more of their domestic gold supply within their borders following recent price surges. Driven by a mix of "resource nationalism," waning confidence in the U.S. dollar as the global reserve currency, and fears of international sanctions, governments are moving to increase domestic refining, restrict exports through taxes, and build up their central banks' official reserves.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: +$1.447 (+2.40%)
5-Day Change: +$0.914 (+1.51%)
YTD Range: $54.778 - $121.630
52-Week Range: $45.563 - $121.630
Weighted Alpha: +8.64

Silver is maintaining intraday gains, but remains within Friday's range. The white metal is displaying comparative strength versus gold amid AI optimism and risk-on sentiment, which has pushed the Nasdaq to new record highs.



A rebound above the 20-, 50-, 100-day moving average complex is needed to take pressure off the downside and shift focus to the late-September highs at $67.513/529 and the more important 9-Sep high at $68.314. The latter is the key to unlock the $70 zone.

Metals Focus (MF) projects silver to strengthen over the next 12 to 18 months by tracking gold higher before eventually outperforming it as renewed price momentum attracts investor interest. They anticipate this growth will be driven primarily by investment demand rather than physical tightness, as weakening demand in physical markets, jewelry, and industrial fabrication caps immediate support.

Friday's low at $59.708 stands in front of the $58.272 Fibonacci level. Below that, the late-July lows at $56.681/583 would be in play.

PGMs

The outlook for platinum remains constructive despite significant volatility this year, which saw prices hit a record high near $2,900 before pulling back. Supply is heavily concentrated in South Africa (with notable contributions from Russia and elsewhere) and has faced persistent constraints from operational challenges, while demand has generally outpaced production in recent years. This has led to multi-year market deficits that have significantly depleted above-ground stocks.

Platinum is currently trading just above $1,700. Looking ahead, even with forecasts of a modest surplus or near-balance in 2026 (partly tied to investment flows), inventories remain critically low (around a few months of demand cover), supporting a constructive longer-term outlook driven by structural supply tightness and resilient industrial/jewelry demand. Metals Focus projects platinum will average $1,930 in 2026 (up 51% year-over-year) and rise further to an annual average of $2,060 in 2027.

The palladium market has shifted from prolonged deficits toward balance or surplus conditions amid rising recycling, production adjustments, and pressure on automotive demand from the gradual shift toward electric vehicles. Prices are currently around $1,170-1,200. The near-to-medium-term outlook is more subdued than platinum’s, with potential for continued softness or range-bound trading as vehicle electrification and thrifting weigh on consumption, though supply disruptions or slower EV uptake could provide some support.

Metals Focus tilts more bullish, expecting strong performance in 2026 – averaging $1,440 – driven by strategic demand, risks surrounding Russian anti-dumping investigations, and potential U.S. mine supply disruptions. However, they anticipate the market will soften and move toward balance in 2027, with annual average prices dropping 7% year-over-year to $1,330.

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.