Gold and Silver Forecast: Will Prices Stay Above $2,500 and $29, respectively, Amid Major Economic Events Next Week?
Abstract: Major economic events next week could have a major impact on gold and silver prices – investors should be alert to potential market changes.
Gold and silver prices have risen sharply this week, with gold trading well above $2,500 and silver topping $29 an ounce. The precious metals market is heating up as investors react to signals from the U.S. Federal Reserve that interest rate cuts may be imminent.
Gold Rises Above $2,500: Is the Rally Just Beginning?
Gold prices have been rising steadily and are currently above $2,500, close to a record high. The rally gained momentum after Federal Reserve Chairman Jerome Powell hinted at impending interest rate cuts during his speech at the Jackson Hole symposium.
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Current gold price: Trading above $2,500.
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Probability of an interest rate cut: According to the CME FedWatch tool, there is a 36.5 percent chance of a 50 basis point rate cut next month.
This news had a significant impact on the market and Powell stated: “It is time to adjust policy.”
JUST IN: Fed Chairman Jerome Powell declared at Jackson Hole, “THE TIME HAS COME TO ADJUST POLICY,” signaling a shift toward rate cuts. The timing and pace will be based on economic data, with a focus on avoiding higher unemployment. Full speech: pic.twitter.com/lahO6VrPUs
– Beats in Brief (@beatsinbrief) 23 August 2024
These dovish comments suggest that the Fed is preparing to cut interest rates, a move that has traditionally bolstered gold as a safe-haven asset.
Yahoo Finance tweeted“Inflation has fallen significantly,” says Fed Chairman Powell in Jackson Hole, adding later: “It is time to adjust policy. The direction is clear.”
Consumer stress and economic worries: How they affect gold
Increasing consumer stress in the US could also prompt the Fed to cut interest rates more aggressively. LegalShield’s Consumer Stress Legal Index (CSLI) rose 5.8 points in July to reach 67.6 – the highest level since November 2020.
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CSLI reading in July: 67.6, the highest since November 2020.
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Consumer sentiment: Reflects increased stress due to rising interest rates and inflation.
This rise in consumer stress could force the Fed to act sooner than expected, potentially driving gold prices even higher as investors seek a hedge against economic uncertainty. According to a tweet from Beats in Brief, “Fed Chair Jerome Powell declared at Jackson Hole, ‘THE TIME TO ADJUST POLICY HAS COME,’ suggesting a shift toward rate cuts.”
Silver outperformed gold, exceeding $29 per ounce
Not only did gold record significant gains, but silver also rose, breaking the $29 per ounce mark. The gold-silver ratio fell to 84, its lowest level in a month, underscoring silver’s growing strength in the market.
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Current silver price: Over $29 per ounce.
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Gold-silver ratio: 84, a monthly low.
Silver’s recent rise is partly due to its dual role as a currency and industrial metal. A major factor is Samsung’s announcement of a new solid-state battery in which silver is a key component. This innovation could revolutionize the electric vehicle (EV) market, potentially driving further demand for silver.
Upcoming economic events to keep an eye on
As the market reacts to recent developments, there are several important economic events scheduled for the coming week that could further impact gold and silver prices.
Monday, August 26:
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Core orders for durable goods m/m: Forecast at 0.0%, previous at 0.4%. A weaker than expected reading could indicate lower corporate investment and potentially strengthen gold as a safe haven.
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Orders for durable goods m/m: Expectations are 4.0%, a significant recovery from the previous -6.7%. A strong recovery could put pressure on the gold price as it reflects economic strength.
Tuesday, August 27:
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S&P/CS Composite-20 HPI annually: Forecast at 6.9%, previous at 6.8%. Rising home prices could indicate inflationary pressures, which supports gold as an inflation hedge.
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CB Consumer Confidence: Expected to remain stable at 100.2, slightly below 100.3. A decline in consumer confidence could lead to higher gold prices due to increased economic uncertainty.
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Richmond Manufacturing Index: Previously -17, forecast -14. A less negative reading could indicate some stabilization in the manufacturing sector, which could reduce the attractiveness of gold as a risk-averse investment.
Wednesday, August 28:
Thursday, August 29:
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Preliminary GDP q/q: The forecast is 2.8%, stable from the previous quarter. A stronger-than-expected GDP could put pressure on gold, while a weaker result could increase its attractiveness.
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Unemployment claims: 234,000 are expected, a slight increase from 232,000. Rising claims could increase demand for safe investments such as gold and silver.
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Preliminary GDP price index q/q: Stable at 2.3%. Any deviation could affect inflation expectations and the development of the gold price.
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Pending home sales m/m: A slowdown from 4.8% to 0.2% is expected, which could benefit the price of gold if it signals a cooling of the real estate market.
Friday, August 30th:
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Core PCE price index m/m: Forecast of 0.2%, in line with the previous month. Since gold is the Fed’s preferred inflation indicator, any deviation could have significant implications.
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Chicago Purchasing Managers Index: A price of 44.4 is expected, after 45.3. A further decline could increase economic pessimism and support gold.
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Revised UoM consumer sentiment: Expected at 67.9, slightly higher than 67.8. Stable or improving sentiment could limit gold’s upside potential.
Conclusion: The upward trend continues
Gold and silver are well positioned to continue their upward move as long as they hold critical support levels.
Gold (XAU/UD) is testing a key resistance at $2,518.84, with the 50 EMA at $2,487.35 offering key support. A break above this resistance could pave the way for further gains towards $2,532.86 and $2,547.84.
On the downside, a break below $2,499.45 could be a sign of a possible reversal to bearish momentum, which is why it is important to monitor these levels closely.
Silver (XAG/USD) has rebounded strongly from the $28.72 demand zone, with the 50 EMA at $28.97 reinforcing the bullish view. The immediate resistance is at $29.97, and a breakout could push prices to $30.28 and $30.58.
However, if the price fails to stay above $29.61, it could result in a drop to $28.94.
With key economic events on the horizon, including US core durable goods orders and the CB consumer confidence index, investors should be prepared for potential market shifts. These data points could have a major impact on sentiment and lead to greater volatility in gold and silver prices.
