Gold and silver prices rallied after Federal Reserve Chair Jerome Powell delivered a dovish tone at the Jackson Hole Symposium, reigniting expectations for rate cuts in September. The softer U.S. dollar, stagflation concerns, and ongoing labour market weakness combined to support bullish momentum across both precious metals.
Powell’s Speech Sparks Fresh Buying in Precious Metals
Gold (XAU/USD) reacted positively to Powell’s remarks, which suggested the Fed is considering lowering interest rates as early as September. Although Powell stopped short of a firm commitment, his acknowledgment of mounting labour market risks and persistent inflation created a supportive backdrop for safe-haven demand.
Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like gold and silver, making them more attractive to investors.
Meanwhile, stagflation fears—slowing growth paired with sticky inflation—are also strengthening gold’s long-term appeal. The recent surge in wholesale prices amplified these concerns, keeping precious metals firmly on investors’ radars.
Labour Market Concerns Add to Fed’s Dilemma
Labour market indicators continue to show signs of strain. Weekly U.S. jobless claims rose to 235,000 in mid-August, hinting at a cooling employment backdrop. While the unemployment rate remains steady at 4.2%, any uptick in coming months could reinforce the Fed’s case for a September rate cut.
With inflation risks still present and employment softening, the Fed faces a delicate balancing act. This uncertainty further fuels safe-haven demand for gold and silver.
Gold Technical Outlook: Testing Breakout Levels
Daily Chart (XAU/USD)
- Gold rebounded strongly from the 100-day SMA, forming a bullish reversal.
- Key resistance is clustered in the $3,450–$3,500 zone.
- A breakout above $3,500 would confirm the next leg higher, potentially targeting new record highs.
4-Hour Chart (XAU/USD)
- Price remains in a four-month consolidation between $3,250 and $3,450.
- A break above $3,450 sets the stage for a test of $3,500.
- Sustained momentum above $3,500 could trigger a powerful rally toward the $3,800–$4,000 range.
Silver Technical Outlook: Building Bullish Momentum
Daily Chart (XAG/USD)
- Silver has established a bullish “Adam & Eve” base above $35.00, with price momentum supported by the 50-day SMA.
- A breakout above $40.00 would open the door to $42.00–$43.00.
- RSI remains positive, adding weight to the bullish structure.
4-Hour Chart (XAG/USD)
- Strong bullish price action is evident above $37.00.
- Breakout above $38.60 has strengthened the bullish trend.
- Next targets sit at $40.00 and $42.00 if momentum continues.
U.S. Dollar Index (DXY): Weakness Fuels Precious Metals
Daily Chart
- The U.S. Dollar Index broke below the 50-day SMA, signaling a bearish outlook.
- A sustained drop below 96.00 could accelerate losses toward 90.00, providing additional tailwinds for gold and silver.
4-Hour Chart
- The index broke down from an ascending wedge pattern, reinforcing bearish momentum.
- Support lies at 97.00, with the next target at 96.40.
- Unless the index recovers above 100.50, the broader outlook for the dollar remains negative.
Market Outlook: Gold and Silver Poised for Breakout
Gold and silver are holding firm after Powell’s Jackson Hole speech, with traders now pricing in an 87% chance of a September rate cut, according to the CME FedWatch Tool.
- Gold remains range-bound but is approaching a breakout zone that could unlock further upside if $3,500 is cleared.
- Silver is building momentum above $37 and could extend toward $42 on continued strength.
- Dollar weakness and political pressure on the Fed reinforce the safe-haven bid.
With stagflation fears rising, a softer labour market emerging, and monetary easing back on the table, both gold and silver appear well-positioned to rally further into the year.
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