Gold (XAUUSD) & Silver Price Forecast: Will $3,399 & $33.71 Breakout Levels Hold?

Market Overview

Gold prices (XAU/USD) surged to $3,350 per ounce during the Asian session, supported by a weakening US dollar and growing market expectations of Federal Reserve rate cuts. The US dollar retreated after April’s Personal Consumption Expenditures (PCE) Price Index showed inflation easing to 2.1% year-over-year—its lowest since early 2021—while core inflation slowed to 2.5% from March’s 2.7%.

This inflation cooling bolstered market sentiment that the Fed could begin easing as soon as September, with another potential cut in December.

Fed Governor Christopher Waller’s recent comments that cuts remain possible despite inflation risks reinforced this view, pushing gold higher as the dollar weakened.

Silver Follows Gold’s Lead, Approaches Key Resistance

Silver (XAG/USD) tracked gold’s gains, advancing to $33.22 per ounce as of late Asian trade. The metal’s rally mirrored gold’s, benefiting from a subdued dollar and safe-haven flows.

The metal’s strength is underpinned by industrial demand, particularly amid signs of stabilization in global manufacturing, as well as investor hedging against geopolitical uncertainty.

Investors Brace for Powell’s Speech and Key US Data

Traders remain cautious ahead of critical US economic indicators and Fed Chair Jerome Powell’s remarks. The ISM Manufacturing PMI, due later today, could provide fresh insight into the health of the economy, while Powell’s comments may clarify the Fed’s next moves.

Markets are pricing in nearly a 60% chance of a rate cut by September, with a second cut possible in December.

Overall, the upward momentum of gold and silver reflects a confluence of factors: a softer dollar, cooling inflation, and persistent geopolitical risks, including tensions in Eastern Europe and Asia. As global uncertainties mount, precious metals remain a popular choice for investors seeking safety and diversification.

Short-Term Forecast

Gold ($3,340) and silver ($33.22) show bullish momentum. Key resistance levels at $3,365 and $33.31 may be tested, with further upside potential towards $3,399 and $33.71.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) has surged past the key resistance at $3,318.90, extending gains to $3,340.44 after breaking out of a descending triangle on the 2-hour chart. This sharp move marks a potential shift from the previous consolidation phase.

The breakout was accompanied by a decisive candle and a jump in trading volume, signaling strong buying interest. The 50-period EMA at $3,304.88 has provided dynamic support, while the 200-period EMA at $3,290.75 is reinforcing the bullish outlook.

Price action now targets immediate resistance at $3,365.85, with further upside potential toward $3,399.13 if momentum continues. On the downside, the breakout level at $3,318.90 serves as a critical support level; a failure to hold above this could result in a retest of $3,288.35 or even $3,252.35.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver (XAG/USD) is hovering near $33.22, testing key resistance levels on the 1-hour chart. Price action has carved a series of lower highs and higher lows, coiling within a converging wedge pattern. The immediate challenge lies at $33.31, where a descending trendline caps upward momentum.

A sustained break above this level could open the door to $33.49 and $33.71, with bullish confirmation ideally marked by a strong candle close. The 50-period EMA at $33.11 has recently flipped from resistance to dynamic support, while the 200-period EMA at $33.08 is offering additional backup for the bulls.

However, if silver fails to hold above $33.13, we could see a slide back to $32.97 or even $32.77. Traders should watch for a decisive breakout above $33.31, accompanied by increased volume, to confirm upward momentum.