DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.

Gold and silver suffered punishing declines as both metals broke important Fibonacci retracement levels. Gold futures fell through the 61.8% level, while silver breached its 50% retracement level.

The technical damage in gold was especially severe. Prices sliced through both the 61.8% and 78.6% retracement levels of the August rally, leaving traders with a badly weakened chart.

Gold recorded its largest single session decline since June 9, closing $172 below Friday’s finish. The 3.98% loss left bullion at $4,148, only a few dollars above the session low.

An hourly candlestick chart showed the depth and speed of the collapse. Using the advance from roughly $4,015 to the August highs near $4,755, gold opened sharply lower and lost critical support at $4,298 during the first hour.

Selling continued through successive hours of red candles, some representing declines as large as $30. By 4:00 a.m. ET, gold had reached the next support level at $4,174, corresponding to the 78.6% Fibonacci retracement.

Gold attempted to remain above $4,174 from 4:00 a.m. through 9:00 a.m. ET. The largest hourly decline then arrived between 10:00 a.m. and 11:00 a.m., when the metal dropped more than $38 in 60 minutes.

Prices spent the remainder of the session trying to recover the 78.6% level. By the close, however, $4,174 had become resistance after gold surrendered two major technical levels in one session.

The market pressure followed a geopolitical development involving Iran and the Strait of Hormuz. Iranian Foreign Minister Abbas Araghchi offered Friday at the UN General Assembly to reopen the strait within seven days if Washington ended its naval blockade, lifted sanctions on Iranian oil, and released frozen funds.

President Trump rejected the proposal over the weekend, telling reporters, “They made a proposal but I rejected it,” according to CNBC. Trump also told Axios that he expected talks to resume this week, while the Wall Street Journal reported that he signaled to aides that US strikes could resume after November’s midterms.

Roughly one fifth of global oil supply passes through the Strait of Hormuz. Brent crude reversed sharply following the rejection, rising more than 3% toward $107 per barrel.

The resulting pressure on gold came through expectations for Fed policy rather than a rush toward the metal amid rising conflict risk. Oil near $107 adds to headline inflation, strengthening the case used by hawkish policymakers who favor further tightening.

The Fed had already lifted its target range to 3.75% to 4.00% on September 16, marking its first increase since 2023. Money markets priced a 65.9% probability of another hike at the October 27 and 28 meeting, compared with 57.6% one week earlier and 9.4% one month earlier.

Cleveland Fed President Beth Hammack warned against allowing the public to “accept elevated prices as the new normal,” while Philadelphia Fed President Anna Paulson said “modest additional tightening may be necessary.” Because gold pays no yield, expectations for additional tightening increase the real return available on cash and short term paper, making bullion less competitive.

Silver declined even more sharply, falling roughly 4.7% to about $61.29. The ratio of gold to silver widened to approximately 67.7 to 1 as the more industrially exposed metal fell faster.

Saxo Bank noted that much of the selling occurred during Asian trading hours, ahead of China’s Golden Week beginning Thursday. Traders in the region often reduce positions before the week long closure, suggesting that calendar related profit taking may have added to the broader macroeconomic pressure.

The September PCE report and Friday’s nonfarm payrolls are scheduled before the October 27 and 28 FOMC meeting. A strong inflation reading or resilient employment number would likely raise hike expectations further, while softer data could give those expectations and gold an opportunity to reverse.

Brent crude also remains central to the outlook. As long as it holds above $100 and the Hormuz standoff continues, the connection between inflation pressure and rate hike expectations remains a burden for gold.

Technically, gold must first regain $4,174 and then reclaim $4,298 before bulls can argue that the chart has begun repairing itself. If those efforts fail, attention turns to the $4,015 low, where a break at the 100% retracement would erase the entire August rally.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.