Market Overview
Gold prices rose to $3,350 per ounce during the Asian session, supported by a weaker US dollar and growing market expectations of an interest rate cut by the Federal Reserve. However, the rise in gold was strongly supported by the significant developments in the war between Russia and Ukraine, where Ukraine launched its most powerful military strike since the beginning of the war between the two countries. Russia is likely to respond with a similar military strike in the coming days, as many experts have predicted. This led to a rise in gold prices during yesterday’s trading, with the price of an ounce of gold reaching $3,353 within hours of the global market opening.
The US dollar also declined after the April Personal Consumption Expenditures (PCE) price index showed inflation declining to 2.1% year-on-year—its lowest level since early 2021—while core inflation slowed to 2.5% from 2.7% in March. This slowdown in inflation boosted market confidence that the Federal Reserve could begin easing monetary policy in September, with another cut likely in December.
Recent comments by US Federal Reserve Governor Christopher Waller that cuts are still possible despite inflation risks reinforced this view, pushing gold higher as the dollar weakened.
Silver follows gold’s lead, approaching a key resistance level.
Silver followed gold’s gains, rising to $33.22 an ounce in late Asian trading. The yellow metal’s rise mirrored gold’s, benefiting from a weaker dollar and safe-haven flows. The metal’s strength supports industrial demand, particularly amid signs of stabilization in the global manufacturing sector, as well as investors hedge against geopolitical uncertainty.
Investors prepare for Powell’s speech and key US data
Traders remain cautious ahead of key US economic indicators and remarks from Federal Reserve Chairman Jerome Powell. The ISM Manufacturing PMI, due later today, could provide fresh insight into the health of the economy, while Powell’s remarks could provide clarity on the Fed’s next steps. Markets are pricing in a nearly 60% chance of an interest rate cut by September, with a second cut likely in December.
Overall, the upward momentum of gold and silver reflects a combination of several factors: a weaker dollar, slowing inflation, and persistent geopolitical risks, including tensions in Eastern Europe and Asia. With global uncertainty increasing, precious metals remain a popular choice for investors seeking safety and diversification.
Short-term forecasts
Gold ($3,340) and silver ($33.22) are showing upward momentum. Key resistance levels at $3,365 and $33.31 could be tested, with further gains toward $3,399 and $33.71.
Gold Price Forecast: Technical Analysis.
Gold (XAU/USD) broke above the key resistance level at $3,318.90, extending gains to $3,340.44 after breaking through a descending triangle pattern on the 2-hour chart. This sharp move signals a potential reversal from the previous consolidation phase. The breakout was accompanied by a decisive candle and high volume, indicating strong buying interest. The 50-period EMA at $3,304.88 provided dynamic support, while the 200-period EMA at $3,290.75 reinforces the bullish outlook.
Gold is now targeting immediate resistance at $3,365.85, with a potential rally towards $3,399.13 if the momentum continues. On the downside, the breakout at $3,318.90 represents critical support; failure to hold above this level could lead to a retest of $3,288.35 or even $3,252.35.
