Gold (XAU) Silver (XAG) Daily Forecast: Fed Policy Uncertainty Stalls Market Rebound

Market Overview

Gold prices (XAU/USD) hovered near $2,651 on Tuesday, lacking upward momentum and briefly dipping to an intra-day low of $2,649. The precious metal’s subdued movement comes amid expectations that the Federal Reserve (Fed) will take a cautious stance on interest rate cuts, maintaining elevated US Treasury yields and bolstering the US Dollar (USD).

Meanwhile, silver (XAG/USD) remains under pressure, trading around $30.44, with an intra-day low of $30.42. Like gold, silver faces challenges as the greenback strengthens and upbeat equity markets divert investor interest away from safe-haven assets.

US Dollar Strength and Economic Data Weigh on Precious Metals

The US Dollar’s resilience stems from strong economic indicators. The S&P Global Flash US Services PMI jumped to 58.5 in December, its highest level in 38 months, while the Composite PMI climbed to 56.6, marking a 33-month high.

Although the Manufacturing PMI dipped to 48.3, robust service sector growth reinforces optimism about US economic expansion.

Higher US Treasury bond yields have further strengthened the dollar. The 10-year US Treasury yield surged to its highest level since November 22, as expectations of higher inflation under President-elect Donald Trump’s policies weigh on rate-cut bets.

Traders now anticipate that the Fed could scale back easing measures.

“The Fed’s cautious stance, coupled with strong US economic data, has solidified USD’s strength, making non-yielding assets like gold less attractive,” analysts noted.

Fed Decision and Retail Sales: Key Catalysts Ahead

Market participants are now awaiting the Federal Open Market Committee (FOMC) meeting and Fed Chair Jerome Powell’s statements on Wednesday.

According to the CME FedWatch Tool, markets are pricing in a 25-basis-point rate cut, which could inject short-term volatility into gold and silver prices.

Additionally, upcoming US Retail Sales data may influence the near-term direction of both metals.

Short-Term Forecast

Gold (XAU/USD) struggles near $2,653, with momentum hinging on holding above $2,647.85. Silver (XAG/USD) faces resistance at $30.76, while support lies at $30.05.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is trading at $2,651.40, down 0.05%, as the market hovers near critical levels. The pivot point at $2,647.85 remains the line in the sand—bullish sentiment holds above this mark, while a break lower could trigger sharper selling pressure. Immediate resistance sits at $2,672.71, followed by the next key barrier at $2,693.50.

Technical indicators show mixed signals. The 50 EMA at $2,666.98 and the 200 EMA at $2,661.33 remain just above current prices, acting as overhead resistance. However, the upward trendline continues to support the potential for a rebound above $2,647.85.

In short, Gold’s momentum hinges on holding the pivot level. A sustained move above could target higher levels, while a break below shifts focus to support at $2,623.73.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver (XAG/USD) is trading at $30.44, down 0.26%, as the price flirts with the pivot point at $30.43. Holding above this level keeps the door open for a bullish reversal, with immediate resistance at $30.76 and the next target at $31.14. However, silver faces overhead pressure, with the 50 EMA at $30.92 and the 200 EMA at $31.10 acting as hurdles.

On the downside, a break below the pivot at $30.43 could expose support at $30.05 and $29.65, accelerating bearish sentiment.

Overall, silver’s upward trendline provides a cushion, but momentum hinges on holding above $30.43. Watch for a close above the 50 EMA to confirm bullish strength.