Gold and silver started trading under pressure, showing a notable decline amid changes in macroeconomic expectations. Spot gold fell to $4,066.82, losing 1.52%, while silver dropped to $58.06, representing a decline of 2.75%. Despite geopolitical tensions in the area of the Strait of Hormuz, investors favored the US dollar and government bonds. Rising yields on US Treasury securities significantly intensified pressure on precious metals. This market reaction once again confirms that monetary factors are currently outweighing geopolitical risks. At the same time, investors are closely watching further signals from central banks. The current correction does not necessarily mean a change in the long-term trend, but it demonstrates the market’s high sensitivity to shifts in interest rates. Volatility may remain elevated until new economic signals emerge.

The key factor driving the pressure was the increase in yields on 10-year US Treasury bonds to 4.714%, the highest level in the current movement. Higher returns on risk-free assets traditionally reduce the appeal of gold and silver, which do not generate interest income. At the same time, the strengthening of the US dollar made precious metals more expensive for buyers outside the United States. This led to an additional contraction in demand from international investors. In the market, expectations also intensified regarding the persistence of high real interest rates. This combination of factors became the main reason behind the synchronized decline in metal quotations. If yields continue rising, pressure on the precious metals sector may persist. Meanwhile, any deterioration in economic indicators can quickly shift the balance of power. That is why market participants remain as attentive as possible to new macro data.

Additional impact on the markets came from the European Central Bank’s decision to keep the benchmark interest rate at 2.25% after the previous hike. Although the decision was expected, it confirmed the regulator’s cautious approach to further monetary policy. Investors received a signal that a cycle of rapid policy easing has not started yet. This supported global yields and strengthened the dollar’s position. At the same time, markets are assessing the prospects for coordinated actions by the world’s largest central banks. It is the difference in rate expectations that increasingly determines the movement of currencies and precious metals. Any changes in the ECB’s rhetoric could become an important driver for financial markets in the coming weeks. For now, investors remain cautious and are in no rush to increase positions in defensive assets. This creates conditions for further short-term fluctuations.

Fresh US statistics were no less important. The number of initial claims for unemployment assistance fell to 187 thousand, indicating the resilience of the US labor market. Such data also reduces the likelihood of the Federal Reserve moving quickly toward a softer policy. Markets are increasingly leaning toward a scenario in which, at the July 29 meeting, the Fed will keep the current rate unchanged. This supports the yields on government bonds and the US currency. For gold and silver, a similar scenario is still unfavorable. At the same time, any worsening of economic statistics can quickly change market expectations. That is why each new macroeconomic report is becoming increasingly significant. Volatility may rise substantially ahead of the Fed’s decision.

Meanwhile, the geopolitical factor has not disappeared from the agenda. Tensions between the US and Iran in the area of the Strait of Hormuz support demand for defensive assets, but this time they failed to offset the impact of high interest rates. Additionally, the market received support from a sharp rise in oil prices. Brent is trading above $98 per barrel, which increases inflation risks. Higher energy prices can make it harder for central banks to fight inflation. This means the period of high rates may last longer than investors expected earlier. This outlook is currently outweighing the positive impact of geopolitical uncertainty on precious metals. In the coming days, the balance between these factors will remain the main topic for financial markets. Any news regarding the situation in the Middle East could sharply shift market sentiment.

The main factors currently shaping the dynamics of the precious metals market:

1. Spot gold falling to $4,066.82 with a daily decline of 1.52%.

2. Silver dropping to $58.06, which is –2.75%.

3. Yields on 10-year US Treasury bonds rising to 4.714%.

4. The ECB’s benchmark rate remaining at 2.25%.

5. A reduction in initial unemployment assistance claims in the US to 187 thousand, supporting expectations of a tighter Fed policy.

6. The US dollar strengthening alongside high oil prices, which increase pressure on precious metals.

7. Geopolitical tensions in the area of the Strait of Hormuz, which supports demand for defensive assets, but is currently lagging behind the impact of high interest rates.

For investors, the coming days could be decisive. Attention will remain focused on US macroeconomic data, the dynamics of government bonds, the US dollar exchange rate, and any signals from the Federal Reserve. No less important are news from the energy market and developments in the geopolitical situation in the Middle East. If yields start stabilizing or declining, precious metals may gain a new impetus to recover. If, however, bond yields continue rising, the correction in gold and silver could deepen. Market participants should take into account high volatility and closely monitor all fundamental signals. Right now, financial markets remain especially sensitive to any changes in monetary policy by the world’s largest economies. This makes the near term one of the most important periods for shaping the subsequent medium-term trend.

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