Precious Metals Caught in a Coordinated Safe-Haven Selloff
A sharp global selloff in technology stocks triggered a coordinated unwind across safe-haven assets, dragging precious metals down with them. Gold plunged more than 2%, breaking below the 4,130 threshold. Silver suffered an even harsher blow, sliding nearly 6% to test a fresh six-month low below $62 an ounce. The damage in silver was amplified by sector deleveraging, which compounded the broader macroeconomic pressure already weighing on the complex.
This aggressive downturn coincides with the market rapidly repricing for hawkish signals out of the Federal Reserve. The FOMC's "dot plot" has turned more hawkish, and the CME FedWatch tool is now pricing in an 89% probability of a December rate hike — a dramatic shift in expectations that undercuts the appeal of non-yielding assets like gold.
Wall Street Banks Revise Their Gold Outlooks
The shift in monetary policy expectations has forced major banks to rethink their forecasts:
- Bank of America says its previous $6,000 target for gold now looks unlikely. The reasoning is that the inflation backdrop remains what the bank calls "uncomfortable," which is likely to drive tighter monetary policy going forward.
- Deutsche Bank put it bluntly: "The hawks are driving out bulls in the gold market." The bank revised its price target to $4,300 an ounce in Q3 — but that figure assumes the Fed stays on hold. It explicitly flagged the downside risk that if the Fed does hike, gold could fall as low as $3,800 an ounce.
- Christopher Muan of Technical Traders had warned a day earlier that if the dollar broke through the 101 level — which it did during this session — gold could fall as much as 15% to roughly $3,600 an ounce in the near term, with silver potentially dropping as much as 40% down to $39 an ounce.
The common thread across these views is that the dollar's strength and the prospect of tighter policy are the dominant forces now driving the metals lower.
US Manufacturing: A Headline Beat Masking Job Cuts
New data from S&P Global painted a more troubling picture of the labor market beneath an upbeat headline. Job cuts at US factories are running near their highest levels since the end of the global financial crisis in 2009 and the depths of the pandemic.
The June flash manufacturing index actually beat estimates, coming in at 55.7. However, economists cautioned that this growth is being temporarily propped up by artificial inventory hoarding amid widespread supply chain delays — meaning the apparent strength is not a clean signal of healthy underlying demand. Manufacturers have now slashed headcounts in three of the past four months, explicitly citing a painful squeeze from soaring raw material costs combined with fading global demand. The combination of rising input costs and weakening demand is forcing producers to cut workers even as the activity index reads strong.
Looking Ahead: Micron Earnings
Attention now turns to Micron, with earnings due after the closing bell the following day. The stock pulled back significantly during the session, closing down about 13% — though it remains up more than 275% year to date. Expectations are high, supported by several upward revisions to estimates in recent weeks.
Still, there is real caution. Investors are nervous about how long the good times can continue for the notoriously boom-and-bust memory chip industry. Micron has beaten on both earnings and guidance for the last six quarters, with an average surprise of more than 15% over that span. Yet despite those beats, the stock has traded lower after reporting results in five of those last six quarters — a pattern that sets up an uncertain reaction regardless of how strong the numbers prove to be.
