Gold and silver lose about $1.05 trillion in a day as Fed hike bets rise

Gold and silver lost about $1.05 trillion in combined market value on Monday. Gold fell 2.9%. Silver dropped nearly 5%. Gold fell below $4,200 to its lowest level since early August. The sell-off was still extending at press time. CME FedWatch shows about a 70% chance of an October rate hike. Gold and silver pay no interest, so higher rates reduce their appeal. The 10-year Treasury yield hit 5.20%, raising the cost of holding metals. The US Dollar Index reached 101.39, its highest level in two months. A stronger dollar makes metals more expensive for foreign buyers. Stalled US-Iran talks lifted Brent crude to about $107. Higher oil fuels inflation fears and rate-hike bets. Several Fed officials, including Cleveland Fed President Beth Hammack, signaled last week that policy should stay restrictive. The central bank has already hiked rates this year. Gold traded near $4,160 after a 2.91% daily drop. The move confirmed a head-and-shoulders pattern that formed between mid-August and early September. Gold broke the pattern's neckline near $4,320 in mid-September. The price did not accelerate immediately. Gold spent two weeks retesting the $4,300 to $4,400 zone before sellers took control. The pattern's measured target aligns with the 0.5 Fibonacci retracement at $3,943. That level is inside the $3,900 to $4,000 support zone. The target is about 5.2% below the current price. Reaching it could erase roughly $1.5 trillion more. Gold's Relative Strength Index is 37 and falling. A daily close above $4,400 would weaken the bearish outlook. Silver fell 4.97% to about $61.11. The article says the steeper drop fits silver's tendency to swing more sharply than gold. Sellers rejected silver in the $66 to $69 zone three times since late August. The zone includes the 0.618 Fibonacci level at $68.88. Each rejection produced a lower high, suggesting buyer strength was fading. Monday's candle broke below $62.87, a level that held in June, August, and mid-September. A daily close below $62.87 could turn that support into resistance. Silver's next bearish target is the 0.786 Fibonacci level at $54.51. That target is about 11% lower. Silver's Relative Strength Index is near 40 and trending lower, mirroring gold. A recovery above $62.87 followed by a break of the $66 to $69 zone would invalidate this outlook. US labor data is due this week. ADP payrolls are due Wednesday. ISM Manufacturing and jobless claims are due Thursday. Friday's nonfarm payrolls report is the key event. A strong report could lift rate-hike odds and extend pressure on both metals. A weak report may allow a rebound.