Gold (XAU/USD) & Silver Price Forecast: Lower Yields Support Metals Before PCE

Gold News: PCE and Warsh Take Center Stage as Iran Risk Eases

August 26 gold and silver fundamental analysis relates to outlook on U.S. inflation and anticipated changes in the policy of the Federal Reserve. Traders are expecting the July PCE price index due out Wednesday and Chair Kevin Warsh’s Jackson Hole speech on Friday. Futures indicate a roughly 61.6% chance the Fed holds rates steady in September, as a combination of softer employment and inflation data has dampened expectations for more hikes on a near-term basis.

The backdrop has become less restrictive for gold and silver. U.S. 10-year Treasury yields slipped to 4.63% as selling in oil eased and optimism grew that Iran and Oman would at least try to deal on managing access through the Strait of Hormuz. Decreasing energy would reduce inflation, and lower yields decrease the opportunity cost of holding gold and silver, which have no yield.

The geopolitical scenario has changed and has not completely evaporated. Iran has resumed talks with Oman on access to the Strait of Hormuz, but a deal has not been reached and Washington recently expanded sanctions on Iran. This has kept safe havens demand elevated and reduced the chances of another significant, disruptive energy event.

Physical demand for gold in China is good. Gold imports through Hong Kong increased by about 11% in July.

Silver retains its own unique support. The Silver Institute expects physical demand and increased electronics demand and AI and other power grid infrastructure, would offset continued silver-thrifting from solar manufacturing.

For August 26, the immediate precious-metals catalyst is clear: PCE is expected to show softer inflation, and may strengthen the case for a Fed pause prior to Warsh’s Jackson Hole speech setting the tone for the next stage of monetary policy.                                                                                          

Gold Technical Analysis: XAU/USD Loses Short-Term Channel Support as $4,606 Comes Into Focus

At the time of this analysis, gold is trading just under $4,633 after slipping below the lower trend line of a recently formed Bullish Channel. Price is currently consolidating just above the 50 EMA at $4,634, just below the 100 EMA at $4,593. This forms a Bullish Channel, and as such, the broad view is still Bullish, but the short term view is now Weak. This is evidenced by price repeatedly failing to break above the $4,673-$4,698 resistance.

RSI is currently $45, and while still Bullish, is now pushing into Weak territory. Immediate support is expected at $4,606, then $4,573 and $4,545. On the other hand, likely resistance will begin to be seen at $4,640, $4,673, and $4,698.

When comparing the broad picture to the short term view, I think that price is in a correction below the levels of $4,640-$4,673. There is a potential that price will fall below $4,606, and will break the broad view of the market, and potentially reach to $4,573. Conversely, a break above $4,673 will resume the Bullish momentum and recover the market to $4,698-$4,724.

Silver Technical Analysis: XAG/USD Compresses Inside Triangle as $68.20 Holds the Key

Silver is trading just under $68.78. Price is consolidating within a narrowing symmetrical triangle after a larger bullish move from the lows of mid-August. Price remains above the 50 EMA at $68.20 and well above the 100 EMA at $67.10.

The broad view of the market is still considered Bullish, as price remains above both moving averages.

In my opinion, if price breaks below $68.20, the broad view of the market will be lost. From that point on, price may fall to $67.10. However, if price breaks above the $68.20 level, then the Bullish view of the market will remain.

RSI = 52 shows balanced momentum indicating neither buyers nor sellers have the upper hand currently. Support is expected at $68.20 with following at $67.47, $66.41, and $65.67. Resistance is expected at $69.50-$69.96, then at $70.87 and $71.71.

According to me, silver is about a breakout. As long as silver stays above $68.20, the bullish structure is maintained. Breaking above $69.96 would indicate a possible move toward $70.87-$71.71. A move below $68.20 would potentially break the structure and show resistance at $67.47.