The US Dollar Index hit a 13-month high this week, putting fresh downward pressure on precious and industrial metals. A stronger dollar makes dollar-priced commodities more expensive for buyers using other currencies, and with the Federal Reserve expected to hold interest rates through 2026, real yields are staying firm — keeping the dollar bid.
Dollar's grip and the Fed's hold
The dollar's rally is the main culprit behind the recent slide in gold, silver, and copper. When the Fed keeps rates elevated, it boosts the dollar's appeal and raises the opportunity cost of holding non-yielding assets like bullion. Market expectations now point to no rate cuts next year, a view Goldman Sachs cited when it slashed its year-end gold target to $4,900 on June 19. JPMorgan, by contrast, still sees gold at $6,000 by the end of the year, even as bearish positioning in gold options becomes extremely crowded. The put-call skew on the GLD ETF is near its highest level since 2017.
Gold trapped in a falling channel
Gold has been trading inside a falling channel since late January, after peaking near $5,608. The metal’s key support sits at $4,027; a weekly close below that level would open the door to $3,249. To rebuild upside momentum, gold needs to reclaim $4,400. A move above $5,004 would turn the weekly trend constructive again. The correlation between gold and silver stands at 0.83 over the past six months, while gold and copper are at 0.61.
Silver’s double bottom and record supply deficit
Silver is tracing the same falling channel as gold, but chart watchers see a potential double bottom pattern forming. The first hurdle for silver is $66.53; a weekly move above $75.36 would break the channel and turn the bias bullish. On the downside, a break below $59.40 could send prices toward $52.27 and then $42.12. A larger trigger sits at $89.62 — a move above that level would complete the double bottom and project a 46% advance.
Underpinning silver's case is a structural supply shortage. The Silver Institute forecasts a sixth straight annual market deficit in 2026, near 215 million ounces, the largest on record. That deficit, combined with silver’s dual role as an industrial and monetary metal, could provide a floor even as the dollar strengthens.
The immediate question is whether gold can hold $4,027 and whether silver can avoid a breakdown below $59.40. The next major data point comes with the Fed’s policy meeting in late July, when the central bank will update its economic projections.
