Gold (XAU/USD) & Silver Price Forecast: NFP Takes Center Stage as Fed Hike Bets Ease

Gold & Silver News: Fed Rate-Hike Bets Ease as U.S. Payrolls and Iran Conflict Take Center Stage

Gold and silver begin this week with sentiment driven by expectations surrounding monetary policy. Now, investors wait to see how the August nonfarm payrolls data, set to be released at 12:30 GMT, will impact the Federal Reserve’s outlook for September. Right now, the markets expect a 50% chance of a interest rate increase at this month’s meeting, whereas earlier in the week that number was close to 70%.

The other part of this repricing can be attributed to statements made by Federal Reserve Governor Christopher Waller. Waller told reporters that he would be in favor of no change on rates as long as the data coming in showed a decrease in inflationary pressures. This statement, of course, was a relief to non-yielding assets after hawkish statements from other Federal Reserve Officials and Chair Kevin Warsh raised expectations that inflation would be persistent enough to warrant even more rate hikes. The U.S. jobless clkaims showed a slight increase, leading most to believe layoffs remain at a relatively low level.

Geopolitics is the second largest driver of markets right now. The ongoing U.S.-Iran conflict is causing a demand for safe havens. However, the impact of this is a little complex. Because of the renewed Middle East conflict, there is an inflationary pressure caused by a disruption in the energy flows. This creates a conflicting risk for gold. Demand for safe havens will most likely go up. However, the disrupted energy flow will almost definitely cause an inflationary shock, and will force the Fed to keep its monetary policy even tighter.

For silver, the backdrop data is very much the same as gold before we get the payrolls data. Precious metals will most likely benefit from a weaker dollar and lower Treasury yields. Silver has more industrial exposure than gold, and at the end of the day will have a higher exposure to changes in the U.S.’s economic growth outlook. Silver has had a good week and will most likely end the week in the positive like gold.

Gold has some structural support as central bank demand, which analysts see as a potential limit to any downside even as volatility continues in expectations for monetary policy.

Fundamental bias: Gold and Silver have a mild bull outlook as we await the US payroll report, which will likely be the biggest market mover today.

Gold Technical Analysis: XAU/USD Rebounds Into $4,465–$4,487 Resistance as Trendline Caps Recovery

Trading at $4,472 as of the 4-hour chart, Gold price showed a sharp recovery from $4,304. I find it interesting that price bounced back to the $4,422–$4,465 resistance zone. With the broader trend line still limiting the rally, this zone actually creates a legitimate price ceiling and a decision zone as opposed to confirming a price reversal.

I have my eyes on the $4,465–$4,487 resistance zone, as the next goal will be the $4,564 level should price break cleanly above $4,487. On the other hand, $4,304 will be the first support of interest, followed by the $4,365 and $4,422 support zones. If these penetrate, attention will return to the broader $4,221–$4,263 price demand zone.

RSI is currently in the upper 50s, and so price is showing signs of recovering, but from a technical perspective price may be considered overbought. With $4,422, I will remain bullish, but will become more confident in the bullish scenario for Gold price once $4,487 is breached. Should price fail to break $4,487, the broader correction scenario will remain intact.

Silver Technical Analysis: XAG/USD Tests $67.21 Resistance as Recovery Runs Into Trendline Confluence

Trading at $66.65 on the 4-hour chart, Silver has been bullish since the $63.8 support zone. The current price has hit resistance just above $67.21. The convergence of a descending trend line, a former resistance zone and moving averages create a densely packed resistance zone. This is the most important price zone for the next directional move.

A break above $67.21 would likely propel the price up toward $68.74 and $70.76. For now, support is at $65.26, with demand continuing to fill beneath at $62.57.

Presently, RSI has bounced off oversold levels and is nearing neutral, supporting the current price action, but is not showing evidence of a new uptrend. Presently, I’m neutral-to-bearish as silver hovers around $67.21. In this case, I’m going to wait until silver breaks clear of $67.21 on a clean 4 hour close before I become more constructive toward $68.74.