Gold (XAUUSD) & Silver Price Forecast: Is Gold Ready for $4,100 as Silver Eyes Trendline Break?

Gold News: Central Bank Buying Offsets Fed Uncertainty

Gold and silver prices are being pulled in opposite directions: while official sector gold buying is as steady as ever, investors still seem to think the Fed will hold interest rates higher than most people had anticipated. Recent moves between the U.S. and Iran in the Middle East have reduced the risk that rising oil prices will feed inflation and further stoke Fed rate hike fears. But as of midmorning today, according to a market analysis by Bloomberg, the market is still pricing in about 64% odds of a Fed hike in September. That prospect continues to weigh on the precious metals’ non-yielding status.

But demand in the long term looks good. Central banks bought a net 41 tonnes of gold in May, led by Poland (18 tonnes) and China (10 tonnes), the World Gold Council announced Tuesday. So far this year, Poland has amassed some 64 tonnes in total, while China’s official gold reserves have grown to 2,331 tonnes, which is 9% of the nation’s total reserves.

On the silver front, investors are betting that strong demand from AI-related hardware manufacturing, energy and solar power generation and electronics production more than offsets the outflows from investment-related demand, which has waned in light of the higher-for-longer interest rates.

Gold Technical Analysis: Gold Breaks Trendline as Bulls Target $4,064 Resistance

After successfully defending the demand area of $4,021 to $4,000, XAU/USD has punched through the descending trendline on the 2-hour time frame, offering encouragement to bulls. Gold is now trading above both the 50 EMA, which lies at $4,021.55, and 100 EMA, which is at $4,038.93, suggesting near term sentiment has shifted in favor of bulls.

Gold is trading around $4,048, looking for buyers to take hold of the momentum and push prices higher to the resistance level at $4,064.08, ahead of $4,100.37 and $4,139.71. The next support lies at $4,021.28, with downside protection at $4,000.00, $3,990.15 and $3,959.00. The RSI has recovered to about 62, reflecting strengthening momentum without yet entering overbought territory.

In my opinion, the technicals appear more attractive as XAU/USD has managed to recover from the demand zone to recover the 50 and 100 EMA as well as the breakout from descending trendline, a sustained move above $4,064 could strengthen bullish momentum toward $4,100, as long as prices trade above $4,064. A failed breakout to the upside may result in another test of the old trendline, with the possibility of a retest of the demand zone of $4,021 to $4,000, as bulls wait for better conditions to push prices higher to the upside.

Silver Technical Analysis: Silver Tests Descending Trendline Resistance

Silver (XAG/USD) has recovered well from lows at around $55.00, to a trading level of $57.86 at the time of writing on 4-hour time frame, in search of the major resistance at the descending trendline that has been in place since early June. Prices are now recovering above the 50 EMA at $57.68, but still below the 100 EMA at $59.22 suggesting a recovery in short term trend.

The near term resistance is seen at around the trendline at about $58.00, with the next levels of resistance at $59.15, $62.75, and $64.86. A break in support could test $54.92 ahead of $52.67 and $50.51. RSI has recovered back to about 58, gaining in the positive but still below overbought zone.

From my point of view, silver bulls are trying to build on a short term recovery, but confirmation of such recovery would require prices to recover the major trendline as well as the near term level of resistance at $59.15. Absent such recovery, the near term bias remains neutral and consolidation may prevail in silver, with support at $54.92 to be tested in absence of buying interest.