Gold (XAU) Silver (XAG) Daily News: Fed Rate Cuts and Inflation Boost Precious Metals

Market Overview

Gold prices (XAU/USD) fell to $2,700 after failing to sustain overnight gains above $2,713. Investor uncertainty surrounding the Federal Reserve’s rate policy has weighed on the precious metal. While November’s US Consumer Price Index (CPI) rose 0.3%, marking the largest monthly increase since April, inflation’s annual rate edged up to 2.7%.

Core inflation rose 3.3%, reinforcing expectations of a 25-basis-point rate cut by the Federal Reserve on December 18, as indicated by a 98% probability on CME Group’s FedWatch Tool. However, higher US Treasury yields and a robust US Dollar have limited gold’s upside potential.

The yield on US Treasury bonds climbed to a two-week high, signaling market expectations of inflationary pressures driven by fiscal policies. Despite gold’s appeal as a hedge, its performance remains under pressure from rising bond yields and the Dollar’s recent monthly peak.

Silver Outshines Gold with Safe-Haven Demand

Silver (XAG/USD) is gaining momentum, trading at $32.13 after hitting an intra-day high of $32.19. Unlike gold, silver benefits from its dual role as a safe-haven asset and an industrial metal, particularly amid inflation concerns and geopolitical tensions.

The metal’s affordability and industrial demand have attracted buyers, shielding it from the broader downward pressures affecting gold.

Central banks’ anticipated rate cuts have also bolstered silver, as lower rates generally increase the appeal of precious metals. Silver’s resilience highlights its growing role in uncertain economic environments.

Geopolitical Risks and Key Events Ahead

Ongoing geopolitical tensions, including conflicts in Eastern Europe and the Middle East, continue to provide a safety net for precious metals. Traders now turn their focus to upcoming US economic data, such as the Producer Price Index and Weekly Jobless Claims, which may influence short-term market sentiment.

Next week’s Federal Open Market Committee (FOMC) meeting will be pivotal for gold and silver’s trajectory.

Short-Term Forecast

Gold is likely to test resistance at $2,726 if it holds above $2,703. Silver, trading at $32.15, remains bullish, targeting $32.37 amid safe-haven demand.

Gold Prices Forecast: Technical Analysis

Gold is trading at $2,716.92, down slightly by 0.04%, but it remains supported by an upward price channel on the 4-hour chart. The pivot point at $2,703.23 acts as a key level; staying above it could sustain the bullish momentum. Immediate resistance is at $2,726.46, followed by $2,748.86, suggesting room for upside potential.

On the downside, support levels at $2,679.44 and $2,657.87 serve as critical safety nets. Technical indicators align with this positive outlook. The 50-day EMA at $2,682.83 reinforces short-term bullish sentiment, while the 200-day EMA at $2,659.32 confirms long-term strength.

For now, gold’s upward channel keeps buyers in control, but a break below $2,703.23 could signal bearish pressure.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver is trading at $32.15, up 0.77%, supported by a steady upward price channel on the 4-hour chart. The pivot point at $31.87 is crucial for maintaining the bullish trend, as a break below this level could invite selling pressure.

Immediate resistance is at $32.37, with further targets at $32.87, hinting at continued strength in the metal. On the downside, support levels at $31.58 and $30.95 provide a solid base for buyers.

Technical indicators reinforce this bullish outlook. The 50-day EMA at $31.71 highlights short-term support, while the 200-day EMA at $31.25 underscores a broader upward momentum. As long as silver remains above the pivot, the upward channel is likely to drive prices higher.