Gold is looking to build on Thursday’s late rebound as buyers aim for the key $4,000 level once again early Friday, snapping the corrective decline from lifetime highs of $4,059 set on Wednesday.

Gold set for eighth straight weekly gain

Bracing for the eighth consecutive weekly advance, Gold buyers look to resume the record-setting rally in Asian trading on Friday.

Markets remain risk-averse as the US government shutdown is seen stretching into the next week as the Senate wound up for a long weekend holiday, not back until Tuesday.

Further, declining Asian stocks and a pause in the US Dollar (USD) upsurge also lend support to the bullion as traders digest the latest dovish commentary from Federal Reserve (Fed) policymakers.

New York (NY) Fed President John Williams told the NY Times on Thursday that he supports further interest rate cuts this year, per Reuters.

Meanwhile, San Francisco Fed President Mary Daly noted early Friday that “the Fed is projecting additional cuts, but in risk management.”

Markets now eagerly await the release of the University of Michigan (UoM) Consumer Sentiment and Inflation Expectations data for fresh policy insights and trading impetus, in the wake of delayed key statistics and Fed Chair Jerome Powell’s no-show on monetary policy.

Investors also take account of the latest report carried by the NY Times, citing that the US Bureau of Labor Statistics (BLS) plans to publish the September Consumer Price Index (CPI) report despite the ongoing government shutdown.

However, the inflation data is unlikely to be released on October 15, originally scheduled.

Gold price technical analysis: Daily chart

The daily chart shows that the 14-day Relative Strength Index (RSI) is off the extreme overbought zone but remains near 75, as of writing.

The leading indicator suggests that buyers could regain full vigour, with a retest of the all-time high of $4,059 likely. A sustained break above that will call for a test of the $4,100 – the upper boundary of the rising channel.

To the downside, Gold needs to crack the lower boundary of the rising channel at $3,962 on a weekly candlestick closing basis to sustain the correction toward the $3,900 round figure.

The October 2 low of $3,819 will be next on sellers’ radars, where the 21-day Simple Moving Average (SMA) approaches.

Silver price (XAG/USD) climbs to around $49.70 during the Asian trading hours on Friday. The white metal holds positive ground after reaching the highest price in four decades, bolstered by safe haven flows, strong industrial demand, and expectations of the US interest rate cut. 

It has been ten days since the US government shutdown began on October 1, owing to a failure by Congress to agree on a new budget by the September 30 deadline. Economic uncertainty from concerns about tariffs, the US federal shutdown, and geopolitical risks could boost the safe-haven asset like silver. 

“There’s just a lot of concern about the global economy, and when that happens, people turn to hard assets like silver,” said Michael DiRienzo, CEO of the Silver Institute.

Additionally, the prospect of a rate cut from the Federal Reserve (Fed) might contribute to Silver’s upside. Traders are currently pricing in nearly a 95% odds that the Fed cuts rates by 25 basis points (bps) at its October meeting, while the possibility of an additional reduction in December declines to 82%, from 90%, in the past week, according to the CME FedWatch tool. Lower interest rates could reduce the opportunity cost of holding Silver, supporting the non-yielding precious metal. 

Traders will keep an eye on the preliminary reading of the U-Mich Consumer Sentiment report later on Friday. Also, the Fed’s Goolsbee and Musalem are scheduled to speak later on the same day. If the report shows a stronger-than-expected outcome, this could lift the US Dollar (USD) and weigh on the USD-denominated commodity price. 

XAU/USD Current price: $3,958.49

• Financial markets entered panic mode after another batch of missing US data.
• The US Senate failed once again to pass a funding bill to lift the shutdown
• XAU/USD collapsed on broad US Dollar demand, lower lows at sight.

Spot Gold retreated from the record high of $4,059.36 posted on Wednesday, and plunged below the $4,000 mark in the American session. Broad US Dollar (USD) demand amid risk aversion dominates financial boards on Thursday, with fears revolving around the extended United States (US) government shutdown.

The US missed the release of another batch of employment-related data amid the shutdown, after another failed attempt to pass a funding bill on Thursday. The Senate rejected both the Democratic and the Republican bills, after holding a seventh round of voting.

 Wall Street is under strong selling pressure, with the three major indexes trading in the red, also reflecting the market concerns. As for the Greenback, it stands victorious across the FX board, particularly firmer against commodity-linked currencies.

Other than that, speculative interest seems to have ignore the latest headlines related to the Gaza war. On Wednesday, US President Donald Trump announced a peace deal. The first phase is still to be approved by the Israeli Security cabinet, with a ceasefire expected within 24 hours of such approval. President Trump expects the remaining hostages to be released early next week.

XAU/USD short-term technical outlook

The XAU/USD pair fell towards the $3,950 area, maintaining the bearish momentum. Technical readings in the daily chart indicate that the metal is correcting extreme overbought conditions, but still far from confirming an interim top. The Relative Strength Index (RSI) indicator heads sharply lower, but holds above the 70 level. At the same time, moving averages maintain their sharp bullish slopes far below the current level, with the 20 Simple Moving Average (SMA) currently standing at around $3,800.

The near-term picture, however is bearish. In the 4-hour chart, technical indicators crossed below their midlines, with the Momentum heading south almost vertically. At the same time, XAU/USD fell below a now flat 20 SMA, providing dynamic resistance at around $4,001.00. Finally, the longer moving averages maintain their upward slopes far below the current level, limiting the bearish scope in the longer term.

 Support levels: 3,944.60 3,931.90 3,918.70

Resistance levels: 3,984.00 4,001.00 4,020.00

Silver (XAG/USD) accelerated its recovery on Thursday, with precious metals trading firmer despite the US Dollar’s strength. The pair has reached fresh long-term highs, near 49.70, drawing closer to the $50.00 psychological levels.

Precious metals remain bid on Thursday, fuelled by the political uncertainty in France and Japan, while the US government shutdown enters its eighth day without a solution in sight.

Earlier in the day, New York Fed President John Williams showed his support for further rate cuts, while the focus now shifts to Fed Chairman Jerome Powell and Governor Michelle Bowman, who are expected to talk at a banking event in Washington later today.

Technical analysis: The $50.00 psychological level is attracting bulls

Silver remains heading north, the pair has rallied more than 20% in the last three weeks and is looking overstretched, but the fundamental scenario remains supportive, and there are no signs of a correction other than the bearish divergence on the 4-hour RSI

The white metal bounced from $48.40 in early trading on Thursday and has reached the 49.70 area, with bulls targeting the $50.00 level, where the top of the ascending channel from the mid-September lows meets the price. Further up, the 161.8% Fibonacci extension of the early October rally is at $50.70.

On the downside, immediate support is at Wednesday’s low of $48.40 ahead of the confluence of trendline support with the October 7 lows, at $47.50, and the September 30 and October 2 lows, at the $45.90-$46.00 area.

Silver FAQs

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold’s. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

Silver prices tend to follow Gold’s moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.