Gold (XAU/USD) and silver (XAG/USD) are both experiencing bullish momentum, with prices climbing on the back of a weakening U.S. dollar and expectations of a Federal Reserve rate cut in December. The precious metals have benefitted from a range of factors, including strong job data and mixed economic signals from China, positioning both metals for potential further gains in the short term.
Gold Price Rally Fueled by Rate Cut Expectations
Gold prices extended their upward momentum on Monday, climbing to $2,650 before settling around $2,644 per ounce. This rally comes as market sentiment grows increasingly optimistic that the Federal Reserve will announce a rate cut in December, following a stronger-than-expected U.S. Nonfarm Payrolls (NFP) report.
The NFP data revealed 227,000 new jobs in November, significantly surpassing expectations of 200,000 and the previous month’s revised total of 36,000. While this indicates a strong labor market, the unemployment rate did edge up to 4.2%, suggesting some economic softening.
The possibility of a 25-basis-point rate cut by the Fed in December is seen as highly likely, with market sentiment assigning a 70% probability to the move. Such a cut would likely keep U.S. Treasury bond yields subdued, making gold—a non-yielding asset—more attractive to investors.
Additionally, the weakening U.S. dollar, which slid after the labor market report, has added further support to gold prices, as a weaker dollar enhances gold’s appeal for foreign buyers.
Silver Follows Gold’s Path Amid Safe-Haven Demand
Silver (XAG/USD) has also benefitted from the broader weakness in the U.S. dollar, rising to $31.14 per ounce. The precious metal is finding support not only as a safe-haven asset but also due to its role as an industrial metal, with strong demand from manufacturing sectors in China and other key economies.
Recent data from China, the world’s largest consumer of silver, presented mixed signals. The Consumer Price Index (CPI) posted its smallest increase in five months, while the Producer Price Index (PPI) showed some improvement. These figures suggest moderate stability in the Chinese economy, adding additional support to silver prices.
China’s ongoing economic challenges and mixed data continue to play a crucial role in shaping demand for both gold and silver, keeping prices buoyant amid global uncertainty.
Short-Term Forecast for Gold and Silver
Both gold and silver maintain their bullish momentum, supported by expectations of a Fed rate cut and the ongoing weakness in the U.S. dollar. For gold, the next resistance level lies at $2,656, while silver is targeting $31.28.
If these levels are surpassed, both metals could see further gains. On the flip side, traders will be watching for key support levels in case of any pullbacks.
Gold Technical Outlook: Key Levels to Watch
Gold is trading at $2,644.21, showing a 0.41% increase, with support seen around its pivot point at $2,638.08. The 50-day EMA at $2,641.04 and the 200-day EMA at $2,646.06 reinforce a bullish short-term bias. Immediate resistance for gold is at $2,656.43, with further targets at $2,666.24 and $2,676.34.
On the downside, $2,627.23 is the key support level to watch. If gold stays above this, the bullish trend could persist, but a drop below could indicate a reversal in momentum.
Silver Price Technical Outlook: Strong Bullish Trend
Silver is currently trading at $31.14, up 0.55%, and showing strong support above the pivot point at $30.86. The 50-day EMA at $31.05 and the 200-day EMA at $30.97 indicate stability in the short term, with immediate resistance seen at $31.28, followed by targets at $31.48 and $31.74.
Should silver maintain its position above $30.86, the outlook remains bullish. However, a break below this level could signal a deeper decline, with key support levels at $30.58, $30.32, and $30.07.
Key Factors to Watch: Fed Decision and Economic Data
Traders will be closely monitoring the upcoming U.S. inflation data and the Fed’s December meeting for clues about future monetary policy. A rate cut could drive further interest in gold and silver, particularly if it signals a prolonged period of low interest rates.
Geopolitical uncertainty, particularly in China and other major economies, will also continue to provide support for precious metals, as investors seek safe-haven assets in times of market volatility.
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