Gold and Silver are not responding to Dollar—and that is a warning signal.
Despite a weaker USD at the start of the week, both Gold and Silver have failed to attract meaningful buying interest, trading instead in narrow ranges. This breakdown in the usual inverse correlation suggests that markets are shifting focus away from currency moves and toward a more dominant driver: central bank policy risk.
This week’s lineup of major central bank meetings has effectively frozen conviction. With the Fed, ECB, and BoE all set to speak, traders are reluctant to take directional bets in precious metals until there is clarity on how policymakers intend to respond to the latest oil-driven inflation shock.
But the paralysis masks a clear asymmetry. The range of outcomes may be uncertain, but the direction of risk is not. Dovish outcomes are effectively off the table. Collectively, at best, central banks can deliver cautious holds, but even those would still imply a tightening bias rather than a pivot toward easing.
With dovish outcomes off the table, precious metals face asymmetric downside risk as central banks collectively lean hawkish. That is the key dynamic driving current price action. Even if policymakers sound cautious, the absence of easing signals removes a major pillar of support for Gold and Silver.
The ECB and BoE illustrate this tension clearly. Both are expected to hold in the near term, but markets continue to price further tightening, particularly from the ECB as early as June. Any cautious messaging tied to growth concerns may prevent an immediate selloff in precious metals, but it will not be enough to generate a sustained rally. The path of policy remains upward, even if the pace is slower.
For the Federal Reserve, Chair Jerome Powell’s likely message—no hikes, but no cuts either—reinforces the idea that policy is restrictive and will stay that way. Markets may be looking ahead to a potentially more dovish stance under Kevin Warsh, but that transition is not yet reflected in current policy.
At least, that the outlook until the Strait of Hormuz is fully reopened.
Technically, for Gold, focus stays on 4644.49 support. Decisive break there will add to the case that rebound from 4098.45 has completed at 4889.24 already. That should turn near term outlook bearish for deeper fall back to 4098.45 low, and possibly another take on 4000 psychological level.
Similarly, for Silver, firm break of 72.55 support should confirm that rebound from 60.97 has completed at 83.04. Deeper decline should then be seen back to 60.97, and possibly further to 60 psychological level.
