Precious metals extended their decline at the start of the week, with both gold and silver opening sharply lower on Monday. The gap-down opening reflected continued bearish sentiment, while heightened volatility kept traders cautious. Those who followed last week’s sell recommendations have already witnessed a significant downside move, with all major targets successfully achieved.
Over the past few sessions, Gold August Futures have declined from around $4215 to approximately $3991.90 per ounce, while Silver September Futures have corrected from nearly $63.700 to around $57.190 range. The sharp fall has once again left traders wondering whether the downtrend will continue or whether the market is preparing for a short-term recovery through profit booking.
Why Are Gold and Silver Under Pressure?
Gold remained under pressure after tumbling nearly 3% on Monday, briefly falling below the $4000 per ounce level for the first time in three weeks. The latest wave of selling has been driven by renewed geopolitical uncertainty. US President Donald Trump announced plans to reinstate restrictions on Iranian shipping through the Gulf and proposed a 20% transit fee on cargo passing through the Strait of Hormuz.
These developments have increased uncertainty regarding the durability of the fragile ceasefire reached earlier this year. At the same time, investors remain cautious ahead of the release of key US Consumer Inflation (CPI) data, which is expected to provide fresh guidance on the Federal Reserve’s monetary policy outlook. Stronger-than-expected inflation could reinforce expectations of higher interest rates, while softer inflation may support a rebound in precious metals.
Technical Outlook for Gold and Silver Futures
After such a sharp correction over the past few sessions, markets may become vulnerable to short covering and profit booking. Traders holding profitable short positions could begin locking in gains, potentially supporting a technical recovery in both gold and silver before the next major directional move. While the broader trend remains sensitive to US economic data, Federal Reserve expectations, and geopolitical developments, oversold conditions may encourage bargain buying at lower levels.
Buy Gold August Futures
Buy Zone: $3985 – $3995 per ounce
Targets: $4040 $4060 $4100
Stop Loss: As per your risk management.
Buy Silver September Futures
Buy Zone: $57.100 – $57.300 range
Targets: $58.500 $59.000 $60.000
Stop Loss: As per your risk management.
Conclusion
1. Gold and silver have witnessed a sharp correction after opening the week with a significant gap down, rewarding traders who followed last week’s sell strategy.
2. However, after such an aggressive decline, the probability of profit booking and short covering has increased.
3. Traders who are already holding profitable short positions may consider booking profits, while aggressive traders can watch for buying opportunities if prices stabilize around current levels.
4. The upcoming US inflation data is likely to be the next major catalyst for precious metals. Until then, volatility is expected to remain elevated, making disciplined risk management and intraday trading strategies particularly important.
