• Silver price clings to gains above $27.00 as Fed rate cuts in September seems imminent.
• Investors divided over size of Fed’s interest-rate cuts in September.
• Fears of global slowdown have been diminished by lower US jobless claims and China’s hot inflation data.

Silver price (XAG/USD) holds onto gains above the crucial support of $27.00 in Friday’s New York session. The white metal clings to gains as a move towards policy-normalization from the Federal Reserve (Fed) seems certain in September. However, investors divide over the size of interest-rate cuts.

According to the CME FedWatch tool, 30-day Federal Funds Futures pricing data shows that traders see a 56.5% chance that interest rates will be reduced by 50 basis points (bps) in September. The likelihood of 50 bps rate cuts has dropped in a week as fears of global slowdown have diminished after lower-than-expected United States (US) Initial Jobless Claims and hot China’s Consumer Price Index (CPI) data for July.

The US Dollar (USD) exhibits a subdued performance as Fed rate cuts in September seems certain. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, corrects to near 103.15 from four-day high of 103.50. 10-year US Treasury yields slump to near 3.93%.

Historically, lower yields on interest-bearing assets bodes well for the Silver price. But in this case the Silver price is slightly down as investors worry about its global demand as a metal, with application in various industries.

Silver technical forecast

Silver price declines toward the horizontal support plotted from 4 December 2023 high of $25.90 on a daily timeframe. The asset hovers near the 200-day Exponential Moving Average (EMA) around $26.90, suggesting that the overall trend is uncertain.

The 14-day Relative Strength Index (RSI) attempts to return inside the 40.00-60.00 range. A bearish momentum would conclude if the RSI (14) manages to do so.

Silver daily chart

Bullish Signs Following Descending Wedge Breakout

A decisive bullish breakout triggered on Wednesday as natural gas broke out of a bullish descending wedge pattern. Following the breakout upward momentum stayed strong. Each of the past three days closed in the top quarter of the day’s trading range. The 2.15 daily swing high is also a weekly high from last week. This means a weekly bullish signal was also triggered this week. So, a daily close above 2.15 will also confirm the weekly reversal. It follows seven weeks down from the most recent swing high at 3.16.

Further Rest Possible Before Trend Continues

There could be a pullback before natural gas progresses higher and, in that case, the first price level to watch is the 20-Day MA at 2.09. It was successfully tested as support with today’s low of 2.10. Lower down is the 50% retracement level at 2.04, followed by a price zone around the 2.03 to 2.01 daily lows from Thursday and Wednesday, respectively. That would also be roughly around the top boundary line of the wedge pattern.

Watching for Short Term Weakness

The degree of retracement, if it comes before a bullish continuation, may tell us something about the underlying strength in demand for natural gas. Of course, finding support at or above the 20-Day line and then continuing higher would be the more bullish behavior. Nevertheless, the weekly reversal was just triggered, and it indicates there will likely be a continuation to the rally. What is not clear is the aggressiveness of the rally. A prolonged retracement or consolidation prior to a bullish continuation is possible. But, given the clear bullish breakout this week it is also possible that the bulls maintain control into higher price levels.

For a look at all of today’s economic events, check out our economic calendar.

• Silver struggles to capitalize on a modest intraday uptick to the 23.6% Fibo. level.
• The technical setup favours bears and supports prospects for additional losses.
• Any meaningful rise could face difficulty in moving back above the 100-day SMA. 

Silver (XAG/USD) struggles to capitalize on the previous day’s goodish rebound from the $26.45 area, or the lowest level since early May and seesaws between tepid gains/minor losses through the early European session on Friday. The white metal now seems to have stabilized around the $27.50-$27.55 region and remains below the 23.6% Fibonacci retracement level of the July-August downfall.

The said barrier is pegged near the $27.75 region, which if cleared might trigger a short-covering rally and lift the XAG/USD to the $28.00 mark. The recovery momentum could extend further towards the 38.2% Fibo. level around the $28.50-$28.55 region, though is more likely to remain capped near the 100-day Simple Moving Average (SMA) breakpoint, near the $28.75-$28.80 area. However, some follow-through buying, leading to a subsequent strength beyond the $29.00 mark, might negate any near-term negative bias and pave the way for additional gains. 

The XAG/USD might then climb to the $29.45 intermediate hurdle en route to the 61.8% Fibo. level, around the $29.75 region and eventually aim to reclaim the $30.00 psychological mark. That said, technical indicators on the daily chart – though have recovered from lower levels – are still holding deep in negative territory. This, in turn, warrants some caution for bullish traders and positioning for a further intraday appreciating move.

Meanwhile, any meaningful slide now seems to find some support near the $27.30-$27.25 area ahead of the $27.00 mark. A convincing break below has the potential to drag the XAG/USD back towards the $26.50-$26.45 area, or a multi-month low set on Wednesday. The latter should act as a key pivotal point, which if broken will be seen as a fresh trigger for bearish traders and make the white metal vulnerable to test the May monthly swing low, around the $26.00 mark. The commodity could drop further to the $25.60 horizontal support and the $25.00 psychological mark.

Silver daily chart

• Gold price looks to build on the previous rebound early Friday, eyes weekly gains.
• Risk flows return, and the US Treasury bond yields pullback, weighing on the US dollar.
• Unexpectedly upbeat US Jobless Claims data alleviate recessionary fears.
• Gold price averts a symmetrical triangle breakdown and regain 21-day SMA, as the daily RSI turns bullish.    

Gold price is consolidating at the weekly high near $2,410, gathering pace to extend the previous rebound. Gold price remains on track to settle the week in the green, staging a sold recovery from the recent correction from two-week highs.

Gold price awaits fresh catalysts for the next push higher

Markets saw an impressive upswing in Gold price on Thursday even as the US Dollar (USD) rebounded firmly in tandem with the Wall Street indices, following the release of the surprisingly strong US weekly Jobless Claims data.  

Initial claims for state unemployment benefits fell 17,000 to a seasonally adjusted 233,000 for the week ended August 3, the Labor Department said on Thursday, August 8, the largest drop in about 11 months, suggesting the gradual softening in the labor market remains intact while calming markets nerves over a potential US recession.

The uptick in the Gold price could be attributed to restoring investors’ faith across the financial markets after Monday’s turmoil prompted traders to lock in gains in their Gold longs to cover losses elsewhere. 

Meanwhile, conciliatory comments from Richmond Fed President Thomas Barkin and Chicago Fed President Austan Goolsbee also added to the market optimism. However, dovish remarks from Kansas City Fed Chief Jeffrey Schmid spoilt the US Dollar’s party, as the US Treasury bond yields pulled back sharply from the weekly top.

Further, the risk-on market environment also dulled the Greenback’s appeal as a safe-haven asset, helping Gold price settle at the highest level seen so far this week at $2,428.

Additionally, Gold price witnessed chart-based buying after buyers managed to defend a critical support area on the daily timeframe.

In Friday’s trading so far, the buoyant tone in the Asian stock markets keeps the US Dollar on the back foot but Gold buyers seem to have turned cautious heading into the weekly close. The end-of-the-week flows will likely remain in play while traders could also reposition themselves before next week’s crucial US Consumer Price Index (CPI) data.  

The absence of any top-tier US economic data on Friday, put the focus back on risk trends and Middle East geopolitical tensions, as Iran considers to pull back in exchange for progress on Gaza peace talks.

 This comes after US President Joe Biden and the leaders of Egypt and Qatar said Thursday that they were prepared to present a “final” cease-fire proposal to end the war in Gaza and called on Israel and Hamas to return to the negotiating table next week to settle the conflict.

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price remains within a symmetrical triangle formation, having failed to seek a downside break after defending the key rising trendline support at $2,380.

The key leading indicator, the 14-day Relative Strength Index (RSI), has returned to positive territory, currently near 55.00, suggesting that upside risks remain in place for an extended Gold price rebound.

Adding credence to the bullish potential, Gold buyers recaptured the 21-day Simple Moving Average (SMA) support-turned-resistance at $2,415 on a daily closing basis.

The immediate upside barrier is seen at the August 5 high of $2,459, above which the falling trendline resistance at $2,470 and the two-week high of $2,478 will be challenged.

Conversely, should Gold sellers fight back control, the immediate support is aligned the 21-day SMA at $2,415.

If the downside sustains, the abovementioned rising trendline support at $2,380 will come into play once again.

Thereafter, the 50-day SMA at $2,371 could come to the immediate rescue of Gold buyers.

• Silver trades at $27.49, rising over 3.50% after reclaiming the $27.00 level.
• Path of least resistance remains bearish; below $27.00 targets $26.45 and $26.11 support levels.
• Above $27.56, resistance levels are $28.00 and the August 5 high at $28.67.

Silver price surged on Thursday and gained over 3.50% as traders reclaimed the $27.00 figure although strong US data, bolstered the Greenback. Despite that, the XAG/USD bounced off weekly lows of $26.45 and hit a new weekly high before stabilizing at the current spot price. Silver trades at $27.49 as Friday’s Asian session begins

XAG/USD Price Forecast: Technical outlook

Silver prices climbed above $27.00 yet remain below the 100- and 50-day moving averages (DMAs) at $28.76 and $29.79, hinting that sellers are in control. The Relative Strength Index (RSI), which remains bearish, further confirms this.

Hence, the path of least resistance is tilted to the downside. if XAG/USD drops below $27.00, the next support would be the weekly low of $26.45. On further losses, the 200-DMA at $26.11 emerges as the next support, followed by the psychological $26.00 figure.  

Conversely, if XAG/USD buyers reclaim $27.56, the next resistance would be the $28.00 mark ahead of the August 5 high at $28.67.

XAG/USD Price Action – Daily Chart

Bullish Wedge Breakout Targets 2.27

The target from the descending wedge is the beginning of the pattern at 2.27. It is well on its way there now after breaching the 2.15 interim swing high today. Further, a breakout of the 20-Day MA triggered again today with prices continuing to rise from there.

Given the bullish momentum since Tuesday’s daily reversal and hammer candlestick breakout it looks like the retracement may have found a bottom. It will be clearer if natural gas can get above 2.27 and stay above that level. However, today’s advance also triggered a bullish reversal on the weekly chart with a move above last week’s high of 2.15. A daily close above that level will further confirm strength of the reversal.

200-Day MA Higher Target at 2.36

If the 2.27 swing high can be exceeded the next target is up around the 200-Day MA, currently at 2.36. Very close by is the 38.2% Fibonacci retracement at 2.37. Higher up is a target zone that begins around the 50-Day MA, which is currently at 2.45. The previous interim swing low from late-May is then at 2.47, followed by the 50% retracement at 2.52. Last week’s low may have been the low price for natural gas before it attempts to break out above the top downtrend line. The prior dotted trendline remains a little lower for reference.

Higher ABCD Pattern Target is 3.46 (long-term)

Since a bottom has likely been established a rising ABCD pattern can be drawn to help identify higher price targets. The first target from the pattern is at 3.46. That is a pivot level where the price appreciation seen in the AB leg up matches the CD leg up. Once price symmetry is established the potential for a change increases. Also, a breakout through the pivot is a sign of continued strength.

For a look at all of today’s economic events, check out our economic calendar.

In its latest short term energy outlook (STEO), the U.S. Energy Information Administration (EIA) lowered its Brent spot average price forecast for 2024 and 2025.

The EIA now sees the Brent spot price averaging $84.44 per barrel this year and $85.71 per barrel next year. In its previous July STEO, the EIA projected that the Brent spot price would average $86.37 per barrel in 2024 and $88.38 per barrel in 2025.

A quarterly breakdown in the latest STEO shows that the EIA expects the Brent spot price to average $84.06 per barrel in the third quarter, $85.97 per barrel in the fourth quarter, $88.66 per barrel in the first quarter of 2025, $86.33 per barrel in the second quarter, $85 per barrel in the third quarter, and $83 per barrel in the fourth quarter.

In its previous STEO, the EIA forecast that the Brent spot price would average $87.97 per barrel in the third quarter, $89.64 per barrel in the fourth quarter, $90.66 per barrel in the first quarter of next year, $89 per barrel in the second quarter, $88 per barrel in the third quarter, and $86 per barrel in the fourth quarter.

“The Brent crude oil spot price averaged $85 per barrel in July, up $3 per barrel from the average in June,” the EIA stated in its August STEO.

“Although the monthly average Brent spot price was higher in July, daily spot prices fell toward the end of the month driven in part by signals that global economic conditions may be slowing, which has the potential to reduce global oil demand growth,” it added.

“Although market concerns about the economy have lowered crude oil prices in recent days, we still expect that the most recent round of OPEC+ production cuts will reduce global oil inventories over the next three quarters in our forecast and push oil prices higher,” they continued.

In the STEO, the EIA noted that it expects global oil inventories will decrease by an average of 0.8 million barrels per day in the second half of 2024, “with further declines in 1Q25”.

“We anticipate that the market will gradually return to moderate inventory builds in mid-2025 after the expiration of voluntary OPEC+ supply cuts in 4Q24 and as forecast production growth from countries outside of OPEC+ begins to outweigh global oil demand growth,” the EIA added.

“We estimate that global oil inventories will increase by an average of 0.3 million barrels per day in the second half of 2025,” it continued.

In a report sent to Rigzone this week, Bjarne Schieldrop, the Chief Commodities Analyst at Skandinaviska Enskilda Banken AB (SEB), revealed that SEB’s “target is for a Brent crude price of $85 per barrel for 2024”.

“So far it has averaged $83.3 per barrel. Distribution of prices within a year typically varies +/-USD 15 per barrel from the mean. That implies that we should see both $100 per barrel and $70 per barrel,” he added.

“Last year we had a high of $97.7 per barrel and a low of $70.1 per barrel. So far this year we have had a high of $92.2 per barrel and a low of $74.8 per barrel,” he added.

A separate report sent to Rigzone this week by Standard Chartered Bank Commodities Research Head Paul Horsnell showed that the company expects the ICE Brent nearby future crude oil price to average $106 per barrel in the fourth quarter of this year and $109 per barrel overall in 2025.

A research note sent to Rigzone by the JPM Commodities Research team last Friday showed that J.P. Morgan expects the Brent crude price to average $83 per barrel this year and $75 per barrel next year.

In a Rystad Energy oil macro update sent to Rigzone on Tuesday by the Rystad team, Svetlana Tretyakova highlighted that oil prices were “having a volatile start to the week, dropping as low as $75 on Monday, the lowest price since December 2023, before rebounding later in the day”.

“Prices plunged last week as fears of a recession in the U.S. gathered pace and previously bullish investors sold their petroleum positions, but the possibility of supply disruptions in the Middle East are helping to keep prices from falling off a cliff,” Tretyakova added in the update.

To contact the author, email andreas.exarheas@rigzone.com

XAU/USD Current price: $2,418.90

• The mood improved after the United States published encouraging employment figures.
• Concerns about Federal Reserve’s interest rate cuts remain in the background.
• XAU/USD trades with a firmer tone and may extend its advance once beyond $2,424.

Spot Gold is on the run after recovering the $2,400 mark, peaking at $2,424.01 in the American trading session. The bright metal surged as encouraging United States (US) data brought some relief to financial markets, weighing on US Dollar demand. The Greenback, however, is firmer against the Swiss Franc (CHF) and neutral against the Japanese Yen (JPY).

Wall Street trimmed early gains and trades with a firm tone following the release of Initial Jobless Claims, which decreased to 233K from a previously revised 250K, also better than the 240K anticipated. In the absence of major news, the encouraging figure underpinned the mood and helped US indexes reverse most of their Wednesday losses.

Gold’s advantage could be understood by persistent speculation the US Federal Reserve (Fed) will deliver more aggressive rate cuts than previously estimated. A few months ago, speculative interest was considering one timid cut before year-end, with limited hopes for a second one. However, the latest macroeconomic data suggesting the economy could face a recession spurred speculation of potential three cuts before year-end. Even further, market participants are starting to believe the Fed could trim rates before the upcoming September meeting in an out-of-schedule move.

Today’s employment-related data spurred some optimism, but it seems pretty irrelevant when compared to the tepid Nonfarm Payrolls (NFP) report released last Friday, partially responsible for the latest panic trading. Overall, it seems that speculative interest has finally priced in more aggressive rate cuts and is now waiting for the next catalyst.

XAU/USD short-term technical outlook  

XAU/USD is firmly up after closing in the red for five consecutive days but is still confined within Fibonacci levels. The pair is currently trading around the 38.2% retracement of the June/July rally at $2,411.20, an immediate near-term support. The 23.6% retracement provides resistance at $2,438.80.

Meanwhile, technical readings in the daily chart support a bullish extension, particularly if the pair extends its intraday rally before the aforementioned high. Technical indicators have turned firmly north but remain within neutral levels. At the same time, XAU/USD battles a flat 20 Simple Moving Average (SMA) but remains above bullish 100 and 200 SMAs.

Technical readings in the 4-hour chart skew the risk to the upside, but the momentum seems limited. The pair is currently trading above a mildly bearish 100 SMA, while the 20 and 200 SMAs lack directional strength below it. Finally, technical indicators are entering positive ground with modest upward slopes, not enough to confirm another run north.

Support levels: 2,411.20 2,397.90 2,388.10

Resistance levels: 2,424.00 2,438.80 2,452.90

• Silver prices appreciate as traders price in a deeper rate cut by the Fed in September.
• CME FedWatch tool indicates 72.0% odds of a 50-basis point Fed rate cut in September, up from 11.8% last week.
• Escalated Middle East tensions support safe-haven demand for precious metals like Silver.

Silver price (XAG/USD) halts its three-day losing streak, trading around $26.80 per troy ounce during the European session on Thursday. The prices of non-yielding assets like Silver gain ground due to the rising expectations of a US Federal Reserve (Fed) rate cut in September.

The Fed is highly expected to implement a more aggressive rate cut beginning in September, following weaker employment data from July that has heightened concerns about a potential US recession. According to the CME FedWatch tool, there is now a 72.0% probability of a 50-basis point (bps) interest rate cut by the US Federal Reserve (Fed) in September, up from 11.8% a week earlier.

Additionally, safe-haven demand for precious metals like Silver has increased due to escalating geopolitical tensions in the Middle East. CNN reported two US intelligence officials, saying that Iran and its allies are preparing for potential retaliation against Israel in response to the recent killings of a top military commander of Iran’s Hezbollah in Lebanon and a senior Hamas leader in Tehran.

Last week’s disappointing GDP figures and an unexpected rate cut by the People’s Bank of China (PBOC) have added further selling pressure on Silver. Given that Silver is essential for numerous industrial applications, especially in China, the world’s largest manufacturing hub, these developments have intensified concerns about demand. Traders shift their focus to Consumer Price Index data scheduled for release on Friday, to gain further impetus on the Chinese economy.

• Gold price snaps a five-day downtrend early Thursday.
• Markets turn cautious, as Middle East geopolitical woes return to the fore.
• The US Dollar and the US Treasury bond yields weaken amid persistent dovish Fed bets.  
• Gold price awaits a symmetrical triangle breakdown confirmation on the daily chart.    

Gold price is attempting a tepid bounce while below $2,400 early Thursday, pausing a five-day losing streak, as the US Dollar (USD) sees fresh selling alongside the US Treasury bond yields.

Gold price comes up for air, Iran-Israel conflict in focus

Despite a cautious market mood, in the face of resurfacing Middle East geopolitical tensions, the USD remains broadly subdued. A pullback in the US Treasury bond yields drags the Greenback lower. Risk-off flows return and lift the demand for the US government bonds, knocking down the yields while lifting Gold price.  

Citing two sources familiar with intelligence on the matter, CNN News reported late Wednesday that Hezbollah appears increasingly set to act against Israel “independent” of an expected Iranian response to the recent killing of two terror leaders. According to CNN, multiple officials say Iran seems to still be hashing out its retaliation plans.

Meanwhile, markets speculate over aggressive US Federal Reserve (Fed) easing this year, as economic slowdown risks lurk, keeping the downbeat tone intact around the US Dollar. Markets are now pricing in a 75% chance of the Fed cutting rates by 50 basis points (bps) in September, the CME Group’s FedWatch tool showed, with major brokerages also anticipating a large rate cut in the next meeting, per Reuters.

Looking ahead, Traders will closely monitor the developments surrounding the potential Iranian attack on Israel, which if happens will likely provide extra legs to the rebound In Gold price. Meanwhile, the weekly US Jobless Claims data will entertain markets and offer fresh hints on the country’s labor market situation, impacting the value of the US Dollar and the Gold price action.

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price has been teasing the rising trendline support at $2,380, eyeing a downside break from a seven-week-old symmetrical triangle formation on a daily candlestick closing below that level.

The key leading indicator, the 14-day Relative Strength Index (RSI), is prodding the 50 level from downside, suggesting that there are risks for an extended Gold price rebound.

However, Gold buyers will need to recapture the 21-day Simple Moving Average (SMA) support-turned-resistance at $2,415 to negate the near-term bearish bias.

Further up, they will target the static resistance at $2,425 en-route the previous record high of $2,450.

If the triangle breakdown is confirmed, the immediate support would be seen at the 50-day SMA of $2,368, below which the $2,350 psychological level will get tested.

The 100-day SMA at $2,344 could act as a tough nut to crack for Gold sellers.