Gold (XAUUSD) & Silver Price Forecast: Dollar Strength vs. Fed Cut Bets Shape Outlook

Market Overview

Gold and silver prices edged lower in Friday’s Asian session, pressured by stronger U.S. economic data that buoyed the dollar and curtailed demand for precious metals. The retreat follows gold’s climb to a five-week high earlier in the week, with silver mirroring the pullback as investors booked profits amid shifting rate expectations.

U.S. Data Undermines Precious Metals

The U.S. economy expanded 3.3% in Q2, above both the revised 3.0% estimate and market forecasts of 3.1%, according to the Bureau of Economic Analysis. At the same time, initial jobless claims fell to 229,000, improving from 234,000 the prior week and beating expectations of 230,000. These figures reinforced confidence in U.S. economic resilience, strengthening the dollar and weighing on safe-haven demand for gold and silver.

“Robust growth and low unemployment reduce the urgency for defensive positions in metals,” said one New York-based commodities strategist. The stronger dollar also raises the cost of dollar-denominated commodities for international buyers, adding pressure to bullion.

Rate Cut Bets Cushion the Market

Despite near-term weakness, gold and silver remain supported by expectations of a Federal Reserve rate cut in September. The CME FedWatch Tool indicates that traders are pricing in an 85% chance of a 25-basis-point reduction.

Fed Governor Christopher Waller recently signaled openness to easing policy, citing risks to the labor market, while New York Fed President John Williams emphasized that upcoming data will guide final decisions.

Lower rates reduce the opportunity cost of holding non-yielding assets, such as gold, a factor that continues to underpin long-term demand. Analysts note that silver, with its dual role as a monetary and industrial asset, is likely to benefit if easing policy supports the manufacturing and green energy sectors.

Market Eyes PCE Inflation Data

Attention now turns to the U.S. Personal Consumption Expenditures (PCE) Price Index for July, the Fed’s preferred inflation gauge. Headline PCE is projected to rise 2.6% year-over-year, while the core reading is expected at 2.9%.

A softer outcome could reinforce rate-cut bets, lending support to precious metals, whereas hotter inflation could temper the outlook.

For now, gold and silver remain caught between resilient U.S. data and growing expectations of monetary easing, leaving investors cautious ahead of critical inflation numbers.

Short-Term Forecast

Gold holds near $3,407 while silver steadies at $38.84. A breakout above $3,442 for gold or $39.04 for silver could fuel fresh gains, though support rests at $3,388 and $38.58.

Gold Prices Forecast: Technical Analysis

Gold is trading near $3,407 after breaking out of a large symmetrical triangle, signaling a shift in momentum. The breakout above $3,372 and $3,400 confirms strong buyer interest, with the metal holding a steady uptrend supported by a rising trendline.

The 50-SMA around $3,388 is turning higher, providing dynamic support. The RSI has eased back to 58 after nearing overbought territory, showing that momentum is cooling without reversing.

Meanwhile, the MACD remains positive, keeping the short-term bias constructive. If gold sustains above $3,400, the next test lies near $3,442, while a dip below $3,388 could invite a pullback toward $3,360.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver is trading around $38.84 after breaking out of a large symmetrical triangle, signaling growing momentum. The price is now consolidating just under $39.04 resistance, a key barrier that has capped recent attempts higher.

The breakout from the compression zone was backed by higher lows, confirming underlying strength. The 50-SMA near $38.58 is acting as immediate support, keeping the bias tilted upward. Candlestick action shows rejection wicks on dips, suggesting buyers remain active.

If silver clears $39.04, the next targets sit at $39.52 and $39.97. A slip back under $38.58, however, could trigger a move toward $38.05 before bulls attempt another recovery.