Gold and Silver Price Forecast: Will Fed Minutes Push Gold Toward $4,500?

Gold (XAU) price consolidates on Wednesday after dropping 1.86% on Tuesday. However, the price remains in a bullish trend and prepares for the next move. U.S. Treasury yields pulled back on Wednesday from recent highs. The lower yields are bullish for the metal.

Investors are waiting for the Fed minutes, which will be released on Wednesday. Markets are expecting a 36% probability of rate hike in September. The lower expectations keep the gold and silver (XAG) prices strong above their key support levels. Meanwhile, there is some safe-haven support from the ongoing Iran conflict.

Silver price dropped 3.73% on Wednesday as investors remained cautious ahead of the Fed minutes. Silver prices may benefit if the Fed minutes reduce expectations of further rate hikes. But if oil prices continue to rise, it may keep inflation high enough to keep the Fed on a tight policy. This would put pressure on silver prices via a stronger dollar and higher yields. Silver is also vulnerable to losses due to U.S. retail spending and unexpected employment cuts. These indicators raise concerns about the industrial demand. Therefore, the silver price may lag behind gold until there is a clearer picture of the economic and interest rate environment.

Gold Price Forecast: Break Above $4,500 Could Target $5,000

The daily chart for spot gold shows that the recent drop on Wednesday was due to the strong resistance near the $4,400-$4,500 region as discussed in the previous analysis. The price is consolidating to build momentum to the upside.

But a break below $4,150 will likely indicate further downside towards the $3,900 area. A break above $4,500 will open the door for a strong rally towards the $5,000 region. The RSI indicator remains above the midline, which indicates further upside in the gold market.

The importance of the current resistance is also observed on the daily chart, which shows that $4,350-$4,400 has been a strong resistance zone. A break above this resistance will push the price towards the descending trend line of the wedge pattern at the $5,000 level. A break above $5,000 will likely open the door for a strong rally in the gold market.

The weekly chart for spot gold also shows positive price action. The price has rebounded above the ascending trend line at $3,980 and reached strong resistance in the $4,400 region. The price is now consolidating in a tight range and is looking for the next move. As long as the $4,150 support holds, the price will likely build energy to break to the upside.

Silver Price Forecast: $60 Support Holds as Bulls Target $72

The daily chart for spot silver shows that the price closed below the $64 area on Tuesday. But the price still remains above the 50-day SMA and shows constructive price action.

As long as the price holds the $60 level in the spot silver market, it may rally towards the $72 area. The RSI also remains above the midline and still supports a move towards the $72 region.

The 4-hour chart for spot silver also shows the importance of resistance in the $70-$72 region. The price is now reaching the $63-$64 area as seen by the black dotted support line.

The price must break above the $72 region and out of the descending wedge pattern to initiate a strong rally in the silver market. As long as the price remains within this wedge pattern, the possibility of consolidation in silver is still high.

Bottom Line

Gold and silver remain above their key support levels, but gold has the stronger near-term outlook. The correction in the Treasury yields and safe haven demand support gold while uncertainty over the Fed minutes may keep both metals volatile. Gold must hold above $4,150 and break $4,500 to target $5,000. Silver must remain above $60 and break $72 to confirm a stronger rally. But the weak economic data and concerns about industrial demand may cause silver to lag behind gold until the interest rate outlook becomes clearer.

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