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TL;DR: Gold surged 3.7% to $4,495 after a Treasury buyback shock sent long-end yields and the Dollar tumbling — a real-yield move that survived hawkish FOMC minutes and now puts a break above $4,600 within reach of $5,000.

Treasury Buyback Shock Cracks Long Yields Gold’s path toward $5,000 has become more credible after Wednesday’s Treasury buyback shock triggered a sharp reversal across US yields and Dollar, giving bullion precisely kind of real-rate backdrop needed to extend its medium-term recovery. Gold surged around 3.7% to $4,495 on August 19, its strongest level since early June, while 30-year Treasury yield dropped from this week’s near-two-decade high above 5.33% to around 5.20% and 10-year yield retreated from around 4.75% to 4.65%. Dollar Index simultaneously slid roughly 0.8% to a fresh three-month low near 98.85. Importantly, Gold rose alongside equities and Bitcoin rather than in isolation, pointing to falling real yields and weaker Dollar—not classic risk aversion—as dominant transmission mechanism.

Catalyst was Treasury Department’s unexpected decision to at least double maximum size of long-dated debt buybacks, from $2bn to at least $4bn, targeting 10–20 year and 20–30 year sectors from September 9 through November 4. Actual enlarged operations are still weeks away, yet bond market repriced immediately. That reaction highlights how stretched long end had become after persistent selling pressure. Markets effectively front-ran future liquidity support and relief to duration pressure, driving yields lower before Treasury had purchased a single additional bond.

Hawkish Fed Minutes Couldn’t Reverse the Move More strikingly, rates move survived release of more hawkish-than-expected July FOMC minutes. Several participants favored an immediate hike, many saw further tightening as likely if inflation failed to fall, and some questioned whether financial conditions were sufficiently restrictive.

That makes Gold’s move more significant. Bullion didn’t need a dovish Fed to break higher — the Treasury market did the work instead. Duration repricing was powerful enough to overwhelm a Fed message that, in isolation, should have supported yields and the Dollar.

Worth noting: the minutes themselves reflect a Committee with more hawks than the 9-3 vote alone suggested, though the July meeting is now several weeks stale relative to this week’s developments.

This Was a Real-Yield Move, Not a Debasement Trade Breakeven inflation data provide clearest evidence for underlying mechanism. 10-year breakeven inflation stayed around 2.30% on both August 18 and August 19, even as nominal yields dropped sharply.

With inflation expectations unchanged, decline in nominal yields translated primarily into lower real yields—the more direct textbook support for Gold. That also argues against interpreting Wednesday’s move primarily through currency-debasement lens. Fed minutes were hardly signaling accommodation, inflation expectations did not jump, and identifiable catalyst was Treasury-driven compression in long-duration yields.

Nothing in Aug 19 price action requires a debasement explanation. For now, Gold’s rally is better explained by a specific real-yield shock.

Dollar Breakdown Confirms Gold’s Reversal Dollar chart is reinforcing same story. DXY has broken decisively below 99.41, 38.2% retracement of 95.55–101.80 rebound, strengthening case that advance from 95.55 to 101.80 completed as a three-wave corrective move.

Further decline is favored while 55-day EMA near 100.08 caps recovery, with 97.93, 61.8% retracement, next downside objective.

Gold and Dollar are therefore confirming each other from opposite directions: Gold is breaking medium-term resistance just as DXY is a key near term support. A move in DXY through 97.93 would add further support to Gold’s rally.

Gold 4,600 Is Gateway to $5,000 Gold’s own technical structure has shifted significantly. Larger fall from 5,598.75 increasingly looks to have completed as a triangle at 3,942.43. Daily MACD bullish divergence, break above 55-day EMA near 4,272, and this week’s clean break of descending medium-term trend line all strengthening reversal case.

Near-term outlook stays bullish while 4,324.23 support holds. Next decisive test is resistance cluster between 4,575.31 (38.2% retracement of 5,598.75–3,942.43 decline) and 4,604.74 (61.8% projection of 3,995.82–4,449.73 from 4,324.23).

A clean break of 4,575–4,605 zone would open 161.8% projeciton at 4,778.14 first, followed by 61.8% retracement at 4,966.14—effectively putting $5,000 directly into medium-term view.

Watch 30-Year Yield First, 10-Year Second Rates remain key confirmation. 30-year yield at 5.18% should be watched first, because Treasury buyback impact is concentrated toward long end and this maturity has led latest reversal. Sustained break below 5.18 would indicate duration repricing still has room to run.

10-year support around 4.59% is confirmation level. If 30-year breaks lower while 10-year holds 4.59, move would remain concentrated in long end—still Gold-positive, but less powerful for Dollar. A break of both would signal broader yield compression and strengthen case for DXY extending toward 97.93 while Gold challenges 4,600.

Final check is breakevens. If nominal yields continue falling while inflation expectations stay flat or ease, real yields would compress further and preserve cleanest bullish setup for Gold. If breakevens instead begin rising sharply, story would shift toward inflation repricing and become less straightforward. Track T10YIE/T30YIE alongside the yield levels themselves, not price in isolation.

For now, signal is unusually coherent: long yields are breaking lower, Dollar is breaking support, real yields are compressing and Gold has cleared its medium-term downtrend. $5,000 is not there yet, but decisive break above 4,600 would make it far more than a distant target.

Key Takeaways Gold surged 3.7% to $4,495 after the Treasury unexpectedly doubled its long-dated debt buyback size, triggering an immediate repricing in long-end yields. The move survived hawkish July FOMC minutes, confirming duration repricing, not Fed dovishness, is driving Gold’s rally. Flat 10-year breakevens around 2.30% alongside falling nominal yields point to a real-yield mechanism, not a currency-debasement trade. The DXY has broken below 99.41 support, confirming Gold’s reversal from the opposite direction and opening a path toward 97.93. A break above the 4,575-4,605 resistance cluster would open 4,778.14 and then 4,966.14, putting the $5,000 level within medium-term view.

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Silver has had one of its strongest months in years, but this week’s price action shows just how fragile precious metals rallies can be when bond markets get nervous. The metal surged nearly 10% last week after July’s Non-Farm Payrolls badly missed expectations, printing a loss of 23,000 jobs, prompting markets to price out any chance of a September Fed hike and reviving safe-haven demand.

That momentum reversed on Tuesday, however, with silver dropping toward $64 as global bond yields spiked to multi-year highs on mounting concerns over government spending and persistent inflationary pressures. Rising oil prices added to the unease, keeping inflation risks firmly in focus even as rate-hike expectations continue to fade.

Beneath the volatility, the structural picture remains supportive: silver continues to draw solid demand from the green energy transition, solar panels, electric vehicles, and AI data centre infrastructure, all keeping a floor under prices. All eyes now turn to the Fed’s July meeting minutes and Chair Kevin Warsh’s remarks at Jackson Hole, both expected to offer fresh clues on the path ahead for rates.

Technical Analysis of XAG/USD

As XAG/USD chart shows, silver broke above its descending trendline from June’s highs in early August, a genuine shift after weeks of decline, and has since been holding above the 0.382 Fibonacci retracement near 62.88, right where the 200-period EMA also sits nearby at 62.27. The broader recovery has been building on an ascending trendline off the mid-July lows.

Bullish Scenario

Should buyers defend this 0.382-EMA confluence and push higher, the path would open toward a retest of the 66.73 highs, the 0 Fibonacci level marking the origin of the entire decline. A confirmed break above that zone would signal the correction is fully over.

Bearish Scenario

Conversely, a break below the 0.382 retracement and the ascending trendline would expose the 0.5 level near 61.69, with a deeper slide risking a retest of the 0.618 retracement around 60.49, or even the triangle apex near 56.64 if selling pressure accelerates.

With price sitting right at the intersection of a reclaimed trendline, the 200-period EMA, and a key Fibonacci level, silver looks poised for a decisive move, will this recovery extend toward fresh monthly highs, or does the recent bond market turmoil drag the metal back into its prior range?

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Silver has experienced a wild ride in 2026, but The Silver Institute President and CEO Michael DiRienzo says investors shouldn’t let the volatility obscure a much bigger story: the underlying silver market remains remarkably strong.

DiRienzo joined Money Metals podcast host Mike Maharrey to discuss silver’s dramatic price swings, persistent supply deficits, industrial demand, solar energy, artificial intelligence, investment flows, and the metal’s expanding role in medicine.

His central message was straightforward. Silver is no longer the $13 or $15 metal investors remember from less than a decade ago. In DiRienzo’s view, the market has established substantially higher floors because silver is increasingly being valued for both its industrial utility and its investment potential.

From $121 Silver back to $65Silver surged to roughly $121 an ounce on January 29, 2026, before falling sharply alongside gold. By the morning of Maharrey’s interview with DiRienzo, silver was trading around $65 per ounce.

DiRienzo said the late-February outbreak of war in Iran put additional pressure on precious metals. Interestingly, he noted that gold and silver have tended to respond positively to announcements involving ceasefires or the reopening of the straits, suggesting the conflict has been weighing on the precious metals complex rather than providing the traditional geopolitical boost investors might expect.

But underneath the geopolitical turmoil, DiRienzo sees strong fundamentals.

He noted that just two years ago, predicting an average 2026 silver price above $72 to $75 per ounce would have sounded extraordinary. Yet the market has reached precisely that neighborhood this year.

Mining companies have also benefited substantially from higher prices. DiRienzo said second-quarter figures being reported by mining companies were broadly positive, including among Silver Institute members producing silver both as a primary product and as a byproduct.

Industrial demand remains a powerful forceIndustrial demand remains one of the most important pillars supporting silver.

The Silver Institute expects a small decline in industrial demand this year, driven in part by reduced silver consumption in photovoltaics. With silver prices elevated, solar manufacturers have an obvious incentive to reduce the amount of silver they use or substitute another material.

Doing so, however, isn't simple.

Silver has the highest electrical conductivity of any metal, and the process of screen-printing silver paste onto solar cells is already mature and highly efficient. Alternative materials and metallization technologies still face hurdles before they can compete with silver at scale.

Copper metallization exists, for example, but DiRienzo said it has yet to scale sufficiently to replace silver across the solar industry. For solar farms designed to operate for 25 years, manufacturers also have to consider silver's reliability, durability, and stability rather than simply its upfront cost.

Solar’s Silver appetite has explodedThe scale of silver consumption in solar has changed dramatically over the past decade.

DiRienzo said solar represented about 11% of total silver industrial demand in 2014. By 2024, its share had climbed to just under 30%, marking the peak year for silver consumption in solar to date.

The industry is now attempting to engineer some silver out of its cells as prices rise. But manufacturers were already trying to reduce silver consumption when the metal traded for only $13 per ounce.

As DiRienzo explained, manufacturers relentlessly pursue even tiny savings. Reducing costs by two, three, or four cents per solar cell can matter when production is measured in enormous volumes.

That means efforts to thrift silver will continue. But DiRienzo doesn't foresee silver disappearing from photovoltaics the way photographic demand largely disappeared with the transition to digital photography.

AI could become another major Silver demand driverArtificial intelligence represents another potentially significant source of future silver demand.

The AI boom requires an enormous physical infrastructure of data centers filled with electrical contacts, wiring, and other components that can use silver.

DiRienzo said data centers have grown by more than 6,000% in just three years. The Silver Institute has already examined silver's role in AI data centers and other emerging technologies in a report on silver as a “next generation metal.”

The precise amount of silver being consumed by AI infrastructure remains difficult to quantify. DiRienzo acknowledged that the Institute is hearing about increased consumption but doesn't yet have firm numbers.

The direction, however, appears clear to him. With AI infrastructure still in its infancy and data-center installations expanding around the world, DiRienzo expects silver demand from this sector to increase.

Higher Gold prices are also affecting jewelrySilver may also be benefiting indirectly from gold's elevated price.

DiRienzo pointed to examples of jewelry made primarily from silver and then plated with gold, providing the appearance of gold while using silver as the underlying metal.

Jewelry demand remains highly price-sensitive because it is fundamentally a discretionary purchase. DiRienzo also highlighted an interesting demographic trend: more women between the ages of 24 and 30 are buying silver jewelry globally.

The Silver Institute expects overall silver jewelry demand this year to remain relatively consistent with last year's level.

Higher prices can't quickly produce more SilverThe supply side of the market presents a very different challenge.

A silver miner can't simply flip a switch and dramatically increase production because prices have risen. DiRienzo noted that some of the mining taking place today traces back to plans made 10 years ago, in 2016.

Mining companies are spending more on exploration, but DiRienzo said they aren't doing so recklessly. Much of the activity appears concentrated around existing projects as companies search for additional or previously unidentified veins.

That means substantially higher silver prices aren't necessarily going to unleash a flood of new supply anytime soon.

Mine production increased about 3% in 2025, but the Silver Institute expects production to decline 0.3% in 2026.

A Sixth consecutive Silver market deficitThe supply constraint becomes particularly important when considered alongside persistent demand.

The Silver Institute expects the silver market to record its sixth consecutive annual structural deficit in 2026. DiRienzo estimated the shortfall at roughly 46 million to 50 million ounces, although it could become larger if demand strengthens.

Recycling will help. The Institute expects recycled silver supply to increase by roughly 7% this year.

It still won't be enough.

Even after incorporating recycling into total supply, DiRienzo expects demand to exceed supply again in 2026.

A market deficit doesn't mean the world has literally run out of silver. It means annual demand is exceeding annual newly available supply, forcing the market to draw on above-ground inventories.

And those inventories aren't necessarily as freely available as headline figures might suggest.

The Silver sitting in vaults isn't necessarily availableDiRienzo used London inventories to illustrate the problem.Suppose London Bullion Market Association vaults contain approximately 750 million ounces of silver. That sounds like an enormous stockpile.

But DiRienzo estimated that roughly 75% of that silver is already allocated to exchange-traded products around the world.

That leaves a much smaller pool of readily available metal — and accessing that remaining “free float” can be extremely price sensitive.

The consequences became apparent when tariff concerns caused silver to move from London and elsewhere into New York ahead of the April 2, 2025, “Liberation Day” tariff announcement.

Precious metals ultimately weren't included in the tariffs, but the episode demonstrated how quickly physical metal can move when market participants anticipate disruptions.

Maharrey pointed to another example closer to home: Money Metals was shipping 1,000-ounce silver bars to India during the tight market around Diwali.

DiRienzo recalled the episode and noted that silver lease rates subsequently surged as the market became extremely tight.

Could similar silver squeezes happen again?

“Absolutely,” DiRienzo said. “No question about it.”

Silver investment demand could strengthenThe Silver Institute also expects stronger retail investment demand for physical silver.

DiRienzo said demand for silver coins and bars could increase approximately 7% in 2026, despite challenges involving Indian import duties. India has been an especially strong market for silver bars and coins over the past several years.

Exchange-traded products tell another part of the investment story.

Silver ETPs recorded net inflows of approximately 270 million ounces in 2025. The outbreak of war subsequently contributed to liquidations in gold and silver ETPs, with DiRienzo saying silver had experienced outflows of roughly 6% this year.

He added that the Silver Institute was hearing that investment activity was beginning to pick up again.

Medicine shows another side of SilverWhen Maharrey asked DiRienzo to name one of silver's lesser-known applications that he finds particularly interesting, DiRienzo pointed to health and medicine.

Silver's antibacterial properties give it uses throughout healthcare environments. DiRienzo cited silver coatings in operating rooms and on operating tables and instruments, along with silver incorporated into hospital drapes and used alongside cleaning agents.

He also highlighted emerging nanotechnology. The Silver Institute's August edition of Silver News was set to examine how nanosilver can help doctors administer the correct drug dosage.

Silver's antibacterial properties extend beyond hospitals. DiRienzo also cited water purification, pools, and efforts to combat outbreaks of Legionnaires' disease. In these applications, silver can help prevent infection and promote healing.

These applications may represent relatively small amounts of silver compared with solar panels, electronics, or investment products, but they demonstrate just how broad the metal's usefulness has become.

From $15 to more than $70Perhaps the most striking way to understand today's silver market is simply to look backward.

During the interview, DiRienzo opened the World Silver Survey and read off a series of historical average prices.

Silver averaged $17.05 per ounce in 2017. It subsequently averaged $15.71, followed by $16.21 in 2019. By 2023, the average had risen to $23.35, followed by $28.27 in 2024 and approximately $40 in 2025.

In 2026, DiRienzo said the market is talking about an average above $70 per ounce.

That longer-term perspective matters after silver's retreat from its January peak.

At around $65 an ounce during the interview, silver was dramatically below its $121 high. But Maharrey emphasized that it wasn't very long ago that investors were accustomed to silver trading for $13, $14, or $15.

DiRienzo believes the difference reflects a fundamental change in the market.

“We think new floors have been set in the market,” he said. Silver, in his assessment, is now trading on the strength of both its industrial applications and its investment appeal.

A tight market with powerful long-term driversSilver's 2026 correction may dominate short-term investor psychology, but the fundamentals DiRienzo described point toward a much larger story.

The market is heading toward a sixth consecutive structural deficit. Mine production is expected to decline slightly. Recycling is increasing, but not enough to close the gap. Physical investment demand could rise 7%. Solar still consumes enormous amounts of silver despite ongoing thrift efforts. AI infrastructure presents another rapidly growing source of potential demand.

Meanwhile, much of the silver sitting above ground isn't necessarily freely available to the market.

DiRienzo believes 2026 is shaping up to be a remarkable year for the metal. He expects the annual average silver price to set a record, and he sees evidence that the market has established price floors far above those of the previous decade.

Silver may still be volatile. But in DiRienzo's view, today's silver market is fundamentally different from the one investors knew when the metal traded in the teens.

And those fundamentals — industrial demand on one side and investment demand on the other — could continue defining the silver market long after the geopolitical turbulence of 2026 has passed.

Gold (XAU/USD) builds on Friday's bounce from the $4,300 neighborhood, or a one-week low, and gains some follow-through positive traction at the start of a new week. The commodity, however, struggles to capitalize on the momentum beyond the $4,400 mark and remains below its highest level since June 5, touched on Friday, amid mixed fundamental cues.

Data released on Friday showed that US Retail Sales dropped 0.6% in July, marking the first fall in nine months and the biggest monthly decline since May last year. Adding to this, the University of Michigan's Consumer Sentiment Index dipped in August to 51 from 55.2 in the previous month. This comes on top of signs of cooling US inflation and further tempers expectations for an immediate interest rate hike by the Federal Reserve (Fed), which continues to undermine the US Dollar (USD) and lends support to the non-yielding bullion.

Investors, however, remain worried that volatile energy prices could complicate the inflation outlook and force the Fed to stick to a hawkish stance. Moreover, persistent geopolitical uncertainties help limit deeper losses for the safe-haven USD, capping the upside for the Gold price. Treasury Secretary Scott Bessent said that the US is preparing to hit Iran with economic measures that have never been seen, as soon as this week. This, along with the US-Iran standoff, keeps the geopolitical risk premium in play and should support the buck.

In other developments, President Donald Trump said that he would soon declare the Strait of Hormuz a “territory of the United States.” Meanwhile, Iran’s Foreign Minister Abbas Araghchi said that the US must agree to Tehran's conditions in order for shipping to resume through the waterway and that there were no negotiations currently taking place. Apart from this, fresh Ukrainian attacks on Russian refineries remain supportive of higher oil prices, keeping inflation fears and bets for at least one Fed rate hike in 2026 on the table.

According to CME Group's FedWatch Tool, traders are still pricing in around a 65% chance that the US central bank will raise borrowing costs by the end of this year. This, in turn, warrants some caution for USD bears and before positioning for any further appreciating move in the Gold price as traders await further cues about the Fed's future policy path. Hence, the focus will remain glued to the release of FOMC Minutes on Wednesday. Apart from this, the incoming geopolitical headlines might influence the USD and the precious metal.

XAU/USD daily chart

Technical AnalysisFrom a technical perspective, the recent repeated failures to find acceptance above the $4,400 mark, or the 50% retracement level of the April-June decline, warrant some caution for XAU/USD bulls. Moreover, the precious metal remains below the 200-day Simple Moving Average (SMA), keeping the broader tone capped despite the recent recovery.

Meanwhile, the Relative Strength Index (RSI) at 64.43 leans toward bullish momentum, while the Moving Average Convergence Divergence (MACD) stays in positive territory. Improving momentum indicators, however, only hint that buyers are attempting a rebound within a still bearish, resistance-heavy backdrop.

Nevertheless, sustained strength and acceptance above the $4,400 mark (50% retracement level) should allow the Gold price to test the 200-day SMA near $4,506 and the 61.8% Fibonacci retracement at $4,509. Further barriers are seen at the 78.6% Fibo level at $4,666 and the cycle high zone at $4,865.

On the downside, initial support emerges at the 38.2% Fibo. retracement at $4,290, ahead of the 23.6% level at $4,154, while a deeper slide would expose the structural floor around the Fibonacci anchor near $3,935.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Fed FAQs

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

The 200-day moving average will also deliver new challenges for traders. Some will treat it as resistance. Others may see it as a potential trigger point for an acceleration to the upside.

Although Spot Gold closed higher on Friday, the early session weakness confirmed the previous session’s potentially bearish closing price reversal top. Taking out Friday’s low at $4,311.04 will reaffirm this chart pattern. If it creates strong downside momentum, we could see a 2 to 3 day break into a key 50% to 61.8% zone at $4,195.96 to $4,136.05. Inside this zone is the 50-day moving average at $4,146.45.

What to Watch
Gold closed the week with the rate-relief trade intact and the dollar finally confirming what the bond market had been saying since Wednesday. September hike odds at 31% are the lowest they have been since the payrolls report started the repricing. The August employment and inflation data arrive before the September meeting, and the Hormuz blockade threat means the energy risk sits behind every forward-looking number the Fed will see. Gold gained on a day when yields rose. That tells you the dollar and the hike odds are driving this market right now, not the yield curve.

The trend is up on the swing chart with last week’s high at $4,449.83 as the first test and the 200-day moving average at $4,503.24 above it. Friday’s early weakness confirmed Thursday’s closing price reversal top, which means a break below $4,311.04 early next week reopens the downside toward the 50-day moving average at $4,146.45. The close above Thursday’s low kept buyers in control heading into the weekend, but the reversal pattern is live until the market takes out the high.

If you’d like to know more about how to Spot Gold (XAUUSD), please visit our educational area.

Gold price (XAU/USD) declines to around $4,400 during the early Asian session on Thursday, pressured by escalating geopolitical tensions between the United States (US) and Iran. However, the potential downside for the precious metal might be limited as a tame reading of US inflation eased pressure on the US Federal Reserve (Fed) to raise interest rates as soon as next month.

A senior Iranian official said that Washington and Tehran remain at loggerheads over efforts to agree a permanent end to the war in the Gulf, adding that there ‌had been no progress in talks to revive the interim deal agreed in June and define a time frame to implement it.

Renewed tensions in the Middle East and the continued closure of the Strait of Hormuz weigh on the yellow metal as it raises oil-driven inflation fears. “With the Strait of Hormuz still shut, upside inflation risks will remain top of mind for the foreseeable future,” said Seema Shah, chief global strategist at Principal Asset Management.

The latest US July Consumer Price Index (CPI) inflation moderated across a range of goods and services, cooling September Fed rate hike expectations. This, in turn, could help limit gold’s losses. Data released by the Bureau of Labor Statistics on Wednesday showed that the CPI increased 3.4% YoY in July, versus 3.5% prior. Excluding food and energy, the so-called core CPI increased 2.5% YoY in July, compared to 2.6% in June. Both readings came in line with expectations. 

Interest-rate swaps are now pricing in nearly a 40.1% odds of a Fed hike in September, though the odds on an October move fell to about 60% from 75% a day earlier, with the next increase fully priced for December, according to the CME FedWatch tool. 

Gold upside persists as US CPI fails to revive Fed hike betsAccording to TD Securities, “precious metals maintain upside” as the latest US CPI release “did little to reignite the Fed hike pricing.” The bank notes that “recent price action highlights the gold market is increasingly not expecting hikes,” underscoring a supportive backdrop for bullion even as investors reassess the policy outlook in light of softer inflation dynamics.

Technical Analysis: Gold keeps a bullish vibe in the near term

In the daily chart, XAU/USD holds a bullish near-term bias as it extends above the 100-day simple moving average (SMA) and remains comfortably over the Bollinger Bands’ 20-day middle line, suggesting a well-supported uptrend structure. Price is now pressing the upper Bollinger band, while the Relative Strength Index (14) at 67.51 flirts with overbought territory, hinting that the latest advance is strong but increasingly stretched.

On the topside, immediate resistance is defined by the Bollinger upper band at $4,410, where a sustained break would open the way to further gains. On the downside, initial support is seen near the current area, with the 100-day SMA at $4,390 acting as the first meaningful floor, ahead of the Bollinger middle band at $4,140; a deeper pullback toward the lower band at $3,865 would only come into focus if the bullish structure starts to unwind.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Gold FAQs Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

Silver (XAG/USD) accelerates its advance on Wednesday and trades around $66.00 at the time of writing, up 2.18% on the day. The white metal benefits from a decline in the US Dollar (USD) and US Treasury yields following the release of the latest United States (US) inflation data, while geopolitical uncertainty continues to support safe-haven demand.

The US Consumer Price Index (CPI) rose 0.1% MoM in July after falling 0.4% in June, while the annual rate eased to 3.4% from 3.5%. Both figures come in line with market expectations. Core inflation, which excludes volatile food and energy prices, increased 0.2% MoM and 2.5% YoY, also matching forecasts.

The market reaction favors Silver. The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, falls slightly following the release. US Treasury yields also decline, with the 2-year yield falling by around four basis points to trade near 4.18%.

Lower bond yields tend to support non-yielding precious metals such as Silver by reducing their opportunity cost. At the same time, a weaker US Dollar makes the Dollar-denominated metal cheaper for investors using other currencies.

The inflation figures, however, do not radically alter the monetary policy outlook. With headline inflation still above the Federal Reserve’s (Fed) 2% target and elevated Oil prices keeping upside inflation risks alive, investors continue to expect monetary policy to remain restrictive. Nevertheless, the chance of a September rate hike falls to around 38% from 44% before the release, according to the CME FedWatch Tool.

The geopolitical backdrop provides additional support to Silver. According to Reuters, a senior Iranian source says that no discussions are currently taking place over an extension of the ceasefire between Iran and the United States. The source also claims that Washington violated the interim agreement 48 hours after it was reached before withdrawing from it a few days later.

These tensions maintain uncertainty over a lasting normalization of the situation in the Middle East and the reopening of the Strait of Hormuz. The resulting elevated Oil prices remain a potential source of inflationary pressure while simultaneously supporting demand for safe-haven assets. This combination of a slightly weaker US Dollar, lower US Treasury yields and persistent geopolitical risk allows Silver to maintain strong bullish momentum on Wednesday.

XAG/USD technical analysisIn the one-hour chart, XAG/USD trades at $66.03, retaining a bullish near-term bias as it holds above the 100-hour simple moving average (SMA) at $64.04 and the 200-hour SMA at $61.68. The metal also remains above an upwards-sloping trend-line support, now coming in around $65.57, which reinforces a constructive structure after the latest advance. Momentum is positive but not extreme, with the 14-period Relative Strength Index (RSI) hovering near 59, suggesting steady buying interest without yet reaching overbought territory.

On the downside, immediate support is located at the trend-line near $65.57, ahead of a deeper cushion at the 100-hour SMA around $64.04 and the 200-hour SMA at $61.68. On the topside, initial resistance is seen at the horizontal barrier at $66.80; a sustained break above this cap would open the way for further gains, while failure to clear it could trigger consolidation back toward the nearby trend-line support.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Gold is back on the bids and looks to regain the $4,400 level in Wednesday’s Asian trading, having found buyers near the $4,350 region. All eyes remain on the high-impact US Consumer Price Index (CPI) data, which could determine if Gold stretches higher or corrects sharply.

Gold’s fate hinges on the US CPI inflation reportGold has regained its upside momentum, following a brief profit-taking pullback from the ten-week high of $4,435 reached on Tuesday.

Nothing appears to have changed in the fundamental backdrop as the deadlock between the United States (US) and Iran over the talks on the reopening of the Strait of Hormuz and the US and Yemen's Iran-aligned Houthis’ separate attacks on shipping continues to keep Oil prices and inflation concerns elevated.

However, that fails to deter Gold bulls, as they remain hopeful of another benign inflation report from the US, following the weak Nonfarm Payrolls print for July, which helped markets dial down expectations on a US Federal Reserve (Fed) interest rate hike in September.

At the press time, the odds of a September Fed rate hike stand at a coin-toss level, according to the CME Group’s FedWatch Tool, shifting the focus back to the US CPI data release, particularly the core inflation readings, as they are shielded from the war-driven energy swings.

The annual core CPI is seen rising by 2.5% in July, slowing from a 2.6% increase in June. Meanwhile, core CPI inflation is expected to climb to 0.2% month-over-month (MoM) in July, following a flat reading in June.

Gold faces two-way risks ahead of the US inflation showdown, with hotter-than-expected core CPI readings likely to ramp up bets on a September Fed rate hike, boosting the US Dollar (USD) and US Treasury bond yields at the expense of the non-yielding Gold.

On the other hand, softer core prints could provide fresh legs to the bullion’s uptrend, as the data would further reduce bets on Fed rate hikes this year and fuel a USD downtrend.

However, the geopolitical risk premium will continue to remain in play and could leave Gold’s initial reaction to the CPI release short-lived.

Gold holds firm as stagflation narrative supports CTA lengthAccording to TD Securities, “precious metals maintain a bid,” with the yellow metal “holding gains, and maintaining CTA length north of $4,400/oz, even as oil prices and rates continue to churn higher.” The firm notes that “recent price action continues to hint at a growing stagflationary theme in the gold market,” adding that while “inflation data and Fed pricing will remain keenly watched, a stronger-than-expected inflation print may be needed to shake the current narrative.”

Gold price technical analysis: Daily chart

In the daily chart, XAU/USD trades at $4,398.04. The metal holds a bullish near-term bias as the spot price remains above the 21-day, 50-day and 100-day simple moving averages (SMAs), with the latter providing nearby trend support around $4,388.40. The 200-day SMA at $4,500.55 looms as the next major upside barrier, while the Relative Strength Index (14) at 67.03 approaches overbought territory, hinting that the latest advance could be losing momentum as it nears that longer-term hurdle.

On the downside, immediate support is seen at the $4,398.04 area, followed closely by the 100-day SMA at $4,388.40, forming a shallow demand cluster before deeper support emerges at the 50-day SMA near $4,147.80 and the 21-day SMA around $4,133.91. On the topside, a decisive break above the 200-day SMA at $4,500.55 would open the door for a continuation of the broader bullish trend, while failure to clear this level would keep gold confined to a consolidative phase above its short- and medium-term averages.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Economic Indicator Consumer Price Index ex Food & Energy (MoM) Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The MoM print compares the prices of goods in the reference month to the previous month.The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

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The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.

Inflation FAQs Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.

The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.

Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.

Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.

TD Securities’ commodity strategists report that Gold is holding gains after weaker US jobs data reduced perceived Fed hike risks, but CTAs (Commodity Trading Advisors) are unwinding length. They argue that with energy prices rising again, the stagflation narrative must strengthen for Gold to rally further, and note that prices need to exceed $4,400/oz for CTAs to re-add length.

CTAs trim exposure despite support"Precious metals hit pause. The yellow metal is holding gains after the weaker jobs numbers further questioned the probability of coming Fed hikes."

"However, with energy prices grinding higher again, the stagflation narrative will need to solidify to see gold follow suit."

"For now, Asian appetite from top SHFE traders and continued ETF inflows offer support."

"CTAs on the other hand have begun unwinding length, with prices needing to top $4,400/oz to add back the length."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Silver (XAG/USD) struggles to extend its gains on Monday following last week’s strong breakout as traders assess the Federal Reserve’s (Fed) interest rate outlook amid risks on both sides of its dual mandate. The United States (US) labour market is showing signs of weakness, while inflation risks remain tilted to the upside. At the time of writing, XAG/USD trades around $64, with the $65 psychological mark acting as a firm ceiling.

The white metal climbed to its highest level since June 23 last week after weaker-than-expected US Nonfarm Payrolls (NFP) data prompted traders to scale back expectations for a September Fed rate hike. According to the CME FedWatch Tool, the probability of a rate hike now stands below 50%.

Meanwhile, uncertainty over the reopening of the Strait of Hormuz keeps energy-driven inflation risks in focus, even as Iran and Oman say they are close to finalising an agreement.

Traders now await Wednesday’s US Consumer Price Index (CPI) data, which could provide the next major catalyst and determine whether Silver breaks above $65 or loses momentum. A softer-than-expected reading could further reduce Fed rate hike bets and support the non-yielding metal. Conversely, hotter inflation could revive expectations for a rate increase.

Technical analysis

XAG/USD is in recovery mode after forming a double-bottom pattern near the $55 region and reclaiming the 21-day and 50-day Simple Moving Averages (SMAs). The latest leg higher pushed Silver toward $65, a level that previously acted as support but has now turned into resistance, capping immediate upside attempts.

Momentum indicators support the bullish outlook. The Relative Strength Index (RSI) on the daily chart holds around 61, while the positive and expanding Moving Average Convergence Divergence (MACD) histogram suggests the recovery is gaining strength. A decisive daily close above $65 would expose the 100-day SMA near $69, with the $75 level emerging as the next major hurdle.

On the downside, the 50-day SMA near $62 offers initial support, followed by the 21-day SMA around $59. A break below the latter would weaken the recovery and bring the $55 double-bottom region back into focus.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

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.

TD Securities strategists Ryan McKay and Bart Melek highlight that strong discretionary and Asian buying is supporting Gold, even as CTA (Commodity Trading Advisors) positioning has plateaued. They argue CTAs would likely add length only on a move toward $4,600/oz, while softer United States (US) jobs data, subdued energy prices and expectations that Chair Warsh stays on hold could reinforce a stagflation narrative that benefits Gold.

CTA thresholds and macro tailwinds"Precious metals holding on to gains. Flows have proven strong enough to maintain the upside in gold, but the bar remains high to see additional length from CTAs. Prices would need to make another material leg higher to the $4,600/oz region before CTAs buy more."

"This suggests macro discretionary and Asian appetite will need to continue their buying trends to keep the rally alive. Thus far, Asian appetite remains strong for the yellow metal with broad-based buying across cohorts on SHFE, and continued ETF inflows."

"Meanwhile, the much weaker-than-expected jobs report should see Fed pricing pressures ease, especially with energy prices remaining subdued alongside. These are the first signs of a material shift in the tides for precious metals, with discretionary appetite leading the recovery."

"Higher energy prices could still be a major hurdle, with US inflation data next week in focus. But if the market becomes convinced Chair Warsh won't hike anytime soon, any upside in energy prices could strengthen the stagflation narrative, adding further fuel to the gold bulls."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Silver (XAG/USD) resumes its near-term bullish trend on Friday, after a brief hesitation on Thursday, reaching fresh six-week highs at $63.90, although it is still due to confirm the break of the resistance area at $63.30. The white metal is on track for its best weekly performance since February, favoured by fading expectations that the Federal Reserve (Fed) will hike interest rates in the coming months.

Investors, however, are likely to maintain a cautious mood on Friday, awaiting the release of the key Nonfarm Payrolls report. Analysts at Danske Bank forecast July's payrolls at 70k, with the Unemployment Rate unchanged at 4.2%. The bank notes that “most leading data still point towards solid labour market conditions, although weak labour supply growth also weighs on the employment growth outlook,” adding that “the unemployment rate remains the Fed's primary focus.”

Technical Analysis: A break of $63.30 would confirm a trend shift

XAG/USD trades at $63.78, sustaining a bullish near-term bias with bulls holding prices above the top of the last six weeks' trading range, at the $63.30 area. Momentum indicators, however, show an overextended rally, with the Relative Strength Index (14) at overbought levels around 74. A still-positive Moving Average Convergence Divergence (MACD) reading suggests that upside momentum is not yet exhausted.

A clear break above early July highs in the 63.30 area would confirm that Silver is on a bullish trend, aiming for the June 22 highs in the 67.00 area and the June 17 high, near $71.60. On the downside, any pullback below the mentioned $63.30 exposes Thursday's low in the $60.90 area, ahead of the August 3 low, at $56.57.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

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.

Daily Spot Silver (XAG/USD) Spot silver is edging lower Thursday after hitting its highest level since July 6 at $62.91. At first, the breakout over the 50-day moving average at $62.36 suggested the buying was getting stronger. However, the sudden reversal and break back under the 50-day moving average suggest the move may have been a bull trap.

The 50-day moving average, today’s intraday high at $62.91 and the July 6 swing top at $63.28 are now resistance levels.

The first downside target is the long-term 50% level at $60.835. If a test of this level fails to bring in buyers, look for a potential break into the retracement zone at $58.84 to $57.89.

Since the swing chart trend indicator turned up Wednesday, traders may have shifted into buy-the-dip mode. The first area they are likely to defend is $60.835, followed by $58.84 to $57.89. They are likely to remain in this mode until the swing bottom at $56.64 is violated.

A sustained move over the intraday high at $62.91 could trigger a test of $63.28. Taking out this swing top would reaffirm the uptrend and put the 200-day moving average at $71.01 on the radar.

What to Watch Silver ran hard for two sessions on lower oil, a falling dollar and shrinking rate-hike odds. All three stalled Thursday and the metal is pulling back from the overnight high. The rally was a macro relief trade and macro relief trades need the relief to continue. Friday’s payrolls is the catalyst. Soft hiring and weaker wages keep the dollar under pressure and give silver room to hold above the breakout. Firm wages and solid hiring put the September trade back together and the pullback from $62.91 has further to go.

The breakout above the 50-day moving average failed to hold and that is a concern. Buyers who shifted into buy-the-dip mode after Wednesday’s trend change have to defend the first support area or the rally loses credibility fast. A strong jobs number on top of a failed breakout gives sellers everything they need.

More Information in our Economic Calendar.

Gold (XAU/USD) builds on the previous day's blowout rally of over 4% and advances for the fourth straight session, rising to its highest level since June 18 during the Asian session on Thursday. Hopes of a potential US-Iran peace deal and the reopening of the Strait of Hormuz dragged crude oil prices to an over three-week low on Wednesday. Iran said on Wednesday that it is in the final stage of drafting an agreement with Oman over the strategic waterway, which could help bring an end to the five-month-old US-Iran war. This eased inflation fears and forced traders to scale back their bets for a more aggressive tightening by the US Federal Reserve (Fed). The outlook keeps US Treasury bond yields and the US Dollar (USD) depressed, and is seen supporting the bullion.

Adding to this, the Automatic Data Processing (ADP) reported on Wednesday that private-sector employment in the US grew by 40K in July, marking a notable slowdown from the 95K in the prior month and missing consensus estimates. Separately, data from the Institute for Supply Management (ISM) showed the Services PMI improved a tad to 54.1 in July from 54.0 in the previous month, coming in below expectations for a reading of 54.5. Following the softer data, the probability for a September Fed rate hike eased to roughly 55% from 67%, which continues to undermine the Greenback and acts as a tailwind for the non-yielding Gold. That said, a slew of prominent Fed officials recently warned that persistent inflation risks could necessitate further interest rate hikes.

Fed Governor Lisa Cook stated that inflation remains too high and she is prepared to act by raising interest rates if disinflation stalls, warning that the central bank cannot afford to wait indefinitely if price pressures fail to ease. Meanwhile, San Francisco Fed President Mary Daly noted that officials need more data before the September meeting to see if inflation is temporary or lasting. Nevertheless, traders are still pricing in around an 80% chance that the US central bank will raise borrowing costs by the end of this year amid inflation risks stemming from supply disruptions through the Red Sea. In fact, Iran-backed Houthis in Yemen said ‌that they had launched a missile attack on a Saudi oil tanker off the coast of the port city of Yanbu and another in the Gulf of Aden.

This keeps the geopolitical risk premium in play and helps limit the downside in crude oil prices. Moreover, USD bears seem hesitant and opt to wait for the release of the closely-watched US monthly employment details – popularly known as the Nonfarm Payrolls (NFP) report on Friday – for more cues about the Fed's future policy path. In the meantime, Thursday's US economic docket features the usual Weekly Initial Jobless Claims, which, along with comments from influential FOMC members, will drive the USD demand. Apart from this, further developments surrounding the Middle East crisis could infuse volatility in the global financial markets, which could further provide some impetus to the buck and produce short-term trading opportunities around Gold.

XAU/USD daily chart

Technical Analysis: Gold bulls now await move beyond 23.6% Fibo. before placing fresh betsThe overnight strong move up beyond the 50-day Simple Moving Average (SMA) for the first time since March 17, was seen as a fresh trigger for XAU/USD bulls. Moreover, a firming Moving Average Convergence Divergence (MACD) at 29.52 and a Relative Strength Index (RSI) at 61.28 hint at improving bullish momentum. However, it will still be prudent to wait for some follow-through buying beyond the 23.6% Fibonacci retracement level of the March-June downfall before positioning for any further gains.

The precious metal might then aim to challenge the $4,500 psychological mark – representing the 200-day SMA and the 38.2% Fibo. level confluence. Higher up, the 50.0%, 61.8% and 78.6% retracements at $4,678.89, $4,853.49 and $5,102.07 respectively outline subsequent bullish objectives if the current band is cleared. On the downside, immediate support is provided by the 50-day SMA at $4,157.24, while a deeper setback would likely look toward the Fibonacci cycle low area near $3,939.05 as a more substantial structural floor.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Fed FAQs Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

Summary:

USD/CAD climbed toward weekly highs as falling oil prices weakened the Canadian dollar despite strong domestic trade data. Canada's trade surplus reached a four-year high, but the positive economic data was overshadowed by the sharp decline in crude oil prices. Markets are reassessing Federal Reserve expectations, limiting gains in the US dollar after weaker-than-expected US economic data. USD/CAD rises as oil prices pressure the Canadian dollar The USD/CAD exchange rate extended its gains on Wednesday, climbing toward the 1.4080 level as another sharp decline in oil prices continued to pressure the Canadian dollar.

The move came despite encouraging economic data from Canada, where the country’s merchandise trade surplus expanded to its highest level in four years during June. Under normal market conditions, stronger trade figures would support the loonie. However, investors remained focused on the collapse in crude oil prices, which has become the dominant driver of the Canadian currency this week.

Canada is one of the world’s largest crude exporters, meaning movements in oil prices often have a direct impact on the value of the Canadian dollar. With Brent crude slipping below $80 per barrel as hopes for a diplomatic breakthrough between the United States and Iran improved, traders reduced exposure to the loonie in anticipation of weaker export revenues.

Lower oil prices offset stronger Canadian economic data The Canadian dollar struggled to capitalize on stronger-than-expected domestic economic data as falling crude oil prices remained the dominant driver of market sentiment. Canada reported a merchandise trade surplus that climbed to a four-year high in June, reflecting resilient exports and healthy external demand. Under normal circumstances, such data would provide support for the loonie by reinforcing confidence in the country’s economic outlook.

However, investors largely overlooked the upbeat trade figures as oil prices extended their recent decline. Brent crude slipped below $80 per barrel, marking its lowest level in several weeks, after growing optimism that diplomatic negotiations between the United States and Iran could ease tensions in the Middle East and reduce the risk of supply disruptions. Expectations that global oil supplies could stabilize prompted traders to unwind part of this year’s geopolitical risk premium.

Because crude oil is Canada’s largest export, movements in energy prices have a significant impact on the country’s trade balance, corporate earnings and economic growth prospects. The latest decline in oil prices therefore outweighed the positive impact of Canada’s stronger trade data, leaving the loonie under pressure as investors continued to favor the US dollar.

Softer US data caps US dollar gains While USD/CAD continued to move higher, gains in the US dollar remained limited as investors reassessed the outlook for Federal Reserve policy following a fresh batch of weaker-than-expected US economic data. The greenback initially found support from broad risk sentiment but struggled to build sustained momentum as markets questioned whether the Fed would have enough justification to continue tightening monetary policy.

Recent economic releases painted a mixed picture of the US economy. JOLTS job openings fell by more than economists had anticipated, suggesting labor demand is beginning to cool after months of resilience. Meanwhile, factory orders unexpectedly declined, pointing to softer business investment and moderating manufacturing activity. Together, the data reinforced expectations that economic momentum is slowing, reducing pressure on the Fed to raise interest rates aggressively in the near term.

As a result, traders scaled back expectations for another interest rate hike, with market-implied odds of a September increase easing from the previous session. Lower rate expectations tend to weigh on the US dollar by narrowing its interest-rate advantage over other major currencies.

Despite this, USD/CAD remained supported because weakness in the Canadian dollar proved more significant than softness in the greenback. Falling crude oil prices continued to undermine the loonie, allowing the pair to edge higher even as US dollar gains were capped by expectations of a less hawkish Federal Reserve.

USD/CAD outlook The USD/CAD outlook remains cautiously bullish while the pair trades above the psychological 1.4000 support level. Buyers are now testing resistance around 1.4090, a key technical barrier that has capped recent advances. A decisive breakout above this level could expose 1.4125, with the yearly high near 1.4250 becoming the next major upside target.

However, if oil prices recover or expectations for further Federal Reserve tightening continue to fade, the Canadian dollar could regain some ground, potentially pulling USD/CAD back toward 1.4000.

Why is USD/CAD rising today?

USD/CAD is rising mainly because falling oil prices are weakening the Canadian dollar, while the US dollar remains relatively stable despite softer US economic data.

What is the next key level for USD/CAD?

The immediate resistance level is around 1.4090. A sustained move above this level could open the door for a test of 1.4125, followed by the 2026 highs near 1.4250.

Why do oil prices affect the Canadian dollar?

Canada is a major oil exporter. Lower crude prices reduce export revenues and typically weaken the Canadian dollar, while higher oil prices generally support the currency.

Silver (XAG/USD) trades with a mildly positive tone near $59.50 per troy ounce on Tuesday, up 2% for the day, but falling from recent highs and leaving the metal locked in a tight range. Fading geopolitical tension weighs on safe-haven demand, while a softer United States (US) labor market reading limits the downside by keeping the Federal Reserve (Fed) outlook uncertain.

Al Arabiya reported that an announcement regarding the reopening of the Strait of Hormuz is expected soon. Al Hadath suggested arrangements for a full reopening could be confirmed within hours. None of the reports have been officially verified, but they have already triggered a sharp unwind of the risk premium built into commodity markets during the conflict.

For Silver, the impact cuts both ways. The metal has benefited from defensive flows during the escalation, and a confirmed reopening of the waterway would remove that support. At the same time, cheaper energy and improved global trade conditions favor industrial activity. With roughly half of Silver demand tied to industrial applications, a durable easing of supply disruptions supports the medium-term consumption outlook.

On the macroeconomic front, the JOLTS report showed vacancies falling to 7.359 million in June from the revised 7.537 million and below the 7.4 million forecast. The reading points to continued cooling in labor demand and tempers the message delivered by Monday's strong ISM Manufacturing Purchasing Managers Index (PMI), which climbed to 55.6. Softer labor demand trims the odds of further Fed tightening, easing the opportunity cost of holding non-yielding assets.

The ADP Employment Change is expected to slow to 70K in July from 98K, ahead of Friday's Nonfarm Payrolls report. A run of soft prints would revive expectations that the Fed has reached the end of its tightening cycle, weakening the US Dollar and clearing the path for precious metals.

Short-term technical analysis:On the 4-hour chart, XAG/USD trades at $59.40. The metal holds above both the 20-period Simple Moving Average (SMA) at $58.37 and the 100-period SMA at $57.93, keeping a constructive bullish tone while it consolidates just under nearby resistance. The Relative Strength Index (RSI) at 61 sits in positive territory, suggesting firm upside momentum but still shy of overbought conditions.

On the topside, initial resistance is located at $59.49, ahead of the more notable horizontal barrier at $60.00. On the downside, immediate support emerges at $59.14, followed by $58.99, with the clustered moving average floor around the 20-period SMA at $58.37 and the 100-period SMA at $57.93 expected to underpin the broader bullish bias on deeper pullbacks.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Weekly US Government Bonds 30-Year Yield The 30-year above 5.20% killed the rally before it had a second day. Gold pushed above $4,100 on Thursday’s dollar break and the long end did not flinch. By Friday the dollar had recovered and the $4,100 bid was gone. One session. That is what gold got out of the biggest Fed repricing in two months.

Payrolls Friday Settles What the Fed Left Open The July employment report at 13:30 GMT Friday is the number gold has been waiting for since Warsh refused to give the market guidance. He set this up so the data decides. Gold buyers need the number to come in soft enough to pull September odds lower and restart the dollar selling that lifted the metal above $4,100 last week. The dissenters already have the inflation argument. A firm jobs report with strong wages gives them the labor market too, and gold does not have a defense against both.

Tuesday’s JOLTS report is the early read before Friday’s main event. The week is about one question and the answer arrives in stages.

What to Watch Friday’s payrolls report decides whether the September rate trade tightens or loosens, and gold is going to follow the dollar’s reaction to the number. The Fed hold pulled hike odds down from 80% to 65% and the dollar broke lower on the repricing, but the long end did not cooperate and gold could not hold above $4,100. Tuesday’s JOLTS is the early signal. If it comes in soft, gold buyers get a head start pressing the dollar before Friday. If it comes in strong, the rate rebuild starts early and gold has to defend the week’s lows.

Gold has been straddling the 50% retracement level for weeks and the consolidation is building a base that either launches toward the 52-week moving average or breaks down toward the support below. Payrolls is the catalyst that picks the direction.

Gold (XAU/USD) struggled to make a decisive move in either direction as the persistent US Dollar (USD) weakness was offset by a widening conflict in the Middle East. July employment data from the United States (US) could trigger a big reaction in Gold, while the near-term technical outlook highlights a lack of buyer interest.

Middle East crisis caps Gold’s upsideGold started the week with a bullish gap as geopolitical tensions eased after the US announced over the weekend that it put military operations against Iran on hold and Iran also paused its retaliatory strikes. However, the yellow metal erased a portion of its daily gains later on Monday after Iran clarified that they were not engaged in direct ceasefire talks with the US.

Reports of Saudi forces joining the conflict by launching attacks on Iran-aligned groups in Iraq as retaliation to the Islamic Revolutionary Guard Corps' (IRGC) drone attacks on Saudi oil facilities pointed to a widening conflict, rather than a return to diplomacy. Additionally, Iran claimed an attack on a US military base located in Jordan. Gold turned south on Tuesday and lost more than 1% on the day.

On Wednesday, the USD came under heavy selling pressure and allowed XAU/USD to stage a rebound. Although the Federal Reserve (Fed) refrained from delivering a dovish message following the July policy meeting, the decision to leave the policy rate unchanged in the range of 3.5%-3.75% triggered a USD selloff, as markets had priced in about a 30% chance of a 25 basis points (bps) interest rate hike heading into the event, according to the CME FedWatch Tool.

Fed Chairman Kevin Warsh’s comments in the post-meeting press conference scored a 7/10 on FXS Speechtracker versus a historic 6/10, underscoring a firmer commitment to the inflation fight. The repeated insistence that “only one target and it is 2%” and “we will deliver the 2% target,” alongside remarks that inflation “cannot be cured in 9 weeks” and that the committee “will not hesitate to act,” signaled a resolute, patient hawkish stance despite acknowledging “impressive resilience” in the economy. The emphasis on trend over short-term data, higher nominal and real yields, and a robust, non-inertial policy debate pointed to a Fed comfortable with tight conditions for longer.

According to TD Securities, the latest FOMC decision to leave interest rates unchanged has supported bullion, but it was Fed Chair Kevin Warsh’s stance that proved more pivotal. The bank notes that “the FOMC held interest rates steady, but it was Fed Chair Warsh’s willingness to look through an inflation shock and steer away from data dependency that has given gold a lift higher.” Even so, TD Securities cautions that the broader policy backdrop remains a constraint, stressing that “we continue to believe that market expectations for rate hikes will keep a lid on any material bullishness across precious metals.” 

The USD continued to weaken against its major rivals on Thursday and Gold managed to close the second consecutive day in positive territory. The US Bureau of Economic Analysis (BEA) reported that the US’ Gross Domestic Product (GDP) grew at an annual rate of 1.5% in the second quarter, falling short of the market expectation and the first-quarter’s 2.1% expansion. However, the unprecedented decline seen in USD/JPY suggested that the USD weakness was most likely caused by a suspected market intervention by Japanese authorities to support the Japanese Yen, rather than a change in the underlying fundamentals of the USD. With the dust settling down on Friday and investors shifting their focus back to the Middle East, the USD staged a rebound and XAU/USD turned south, retracing a majority of its two-day rebound. 

Gold investors to stay focused on Middle East, Fed outlookThe US economic calendar will feature the Institute for Supply Management’s (ISM) Manufacturing and Services Purchasing Managers’ Index (PMI) reports on Monday and Wednesday, respectively. Ahead of Friday’s critical official employment report, however, PMI figures are unlikely to have a lasting impact on Gold’s performance. Still, the USD could struggle to find demand and help XAU/USD keep its footing in case either of the headline PMIs falls into contraction territory below 50.

Nonfarm Payrolls (NFP) rose by 57K in June and missed the market expectation of 110K by a wide margin, following three consecutive months of robust growth. A disappointing NFP print below 50K in July could revive concerns over worsening conditions in the labor market and weigh on the USD with the immediate reaction.

Conversely, a reading above 80K is likely to be seen as ‘good enough’ for the Fed to continue to prioritize taming inflation and support the USD. The CME FedWatch Tool shows that markets are currently pricing in about a 35% probability of a rate increase in September. If there is a significant upside surprise in NFP, with a print above 120K, markets could quickly position themselves for a September rate hike. Current market positioning suggests that the USD is likely to rally in this scenario and trigger another leg lower in XAU/USD heading into the weekend.

Economists at Wells Fargo anticipate a steady US labor backdrop over the coming months, noting that they “expect the job market to remain broadly stable, with payroll growth averaging ~80K per month and the unemployment rate holding near 4.2% for the remainder of the year.” While they acknowledge that the recent decline in unemployment “did not occur for the ‘right’ reasons,” Wells Fargo argues that the “sideways move in the unemployment rate signals that labor demand and supply are roughly in balance,” reinforcing the view of a jobs market that is neither overheating nor sharply weakening. 

Investors will also pay close attention to comments from Fed policymakers throughout the week, especially from Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan, who dissented by voting in favor of a rate hike in the last Fed decision.

In case policymakers voice concerns over the inflation outlook and risks posed by the prolonged conflict in the Middle East, the USD is likely to stay resilient and limit XAU/USD’s recovery attempts. On the other hand, Gold could gain traction and push higher if US central bank officials support a steady policy for longer, dampening interest rate hike expectations by citing a cooling economy on the back of the disappointing second-quarter growth data.

Analysts at Commerzbank highlight that the latest Fed decision was far from unanimous, noting that “three of the five regional Fed presidents who serve on the Federal Open Market Committee voted in favor of a rate hike,” underscoring a meaningful hawkish contingent within the FOMC. They argue that Chair Kevin Warsh “apparently assumes that the financial markets will do the Fed’s work for it,” allowing higher market yields to shoulder more of the tightening burden in the near term. However, Commerzbank cautions that this strategy has clear limits: “If inflation does not slow noticeably soon, it will not be enough to merely speak resolutely. Then the Fed will also have to take action.” 

Finally, fresh developments surrounding the crisis in the Middle East are likely to continue to impact Gold’s valuation. A retreat in military action could support the precious metal, while a further escalation and expansion of the conflict could continue to feed into global inflation fears and hurt it.

FXStreet Economic CalendarGold technical analysis: Bulls hesitateThe Relative Strength Index (RSI) indicator on the daily chart fell short of clearing the 50 neutral level, and Gold’s break above the descending trend line and the 20-day Simple Moving Average (SMA) on Thursday failed to attract technical buyers.

The $3,950-$3,920 area stays as a key technical support, where the lower limit of the descending triangle formation and the beginning point of the November-February trend align. If Gold breaks below this region, $3,800 (static level, round level) could be seen as the next bearish target ahead of $3,720 (static level).

On the upside, $4,185 (50-day SMA) could be seen as the next resistance level in case Gold manages to confirm the $4,060-$4,070 (20-day SMA, descending trend line) area as support. If the bullish momentum builds up afterward, $4,240 (Fibonacci 78.6% retracement of the November-February uptrend) could be seen as an interim resistance level before $4,380 (static level).

Gold daily chart Gold FAQs Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

BNY’s Geoff Yu notes World Gold Council (WGC) data showing a sharp rebound in central bank Gold purchases to a record 289 tons in Q2, led by Poland and China, after a very weak Q1. Despite this, the council expects official sector buying to ease and fall below 2025 levels, while ETF outflows and weak mining flows point to fragile investor confidence in Gold prices.

Official buying rebound but outlook softer"The World Gold Council said central bank gold buying in Q1 was much weaker than previously estimated, with purchases of only 57 tons, down 187 tons from the prior view and the weakest start to a year in more than a decade."

"Demand then rebounded sharply in Q2, with net buying reaching a record 289 tons, led by Poland and China."

"Despite that recovery, the council expects central bank gold purchases to ease this year and likely fall below 2025 levels."

"The report also noted Q2 outflows from gold backed exchange traded funds, softer bar and coin demand, weaker jewelry demand, and lower recycled supply."

"Mining and metal sector flows remain weak in iFlow, indicating poor investor confidence in price levels."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

TD Securities’ Ryan McKay and Bart Melek note that Gold remains under pressure as markets price a hawkish Federal Reserve (Fed) path and renewed energy strength. They highlight that CTA (Commodity Trading Advisors) short covering only begins above $4,222/oz, with more substantial net long positioning closer to $4,300/oz. However, they expect multiple dissents and ongoing hike pricing to limit Gold’s ability to reach these CTA trigger levels.

Fed pricing restrains gold CTA flows"Precious metals have remained weak in the face of hawkish market pricing for the Fed, and renewed energy upside will continue to feed into this narrative."

"Gold markets are already well-priced for a hawkish Fed path, and while we are not expecting a hike today, the bar may be high to shift the underlying forward expectations for the yellow metal."

"CTAs need prices above $4,222/oz to catalyze only very minimal short covering, but beyond this level, pricing simulations highlight the potential for asymmetric upside with prices closer to $4,300/oz likely to see notable net long positions."

"However, we expect multiple dissents to a hold decision, and markets continuing to price for hikes in September and beyond, which would likely see any gold upside fall short of hitting those upside CTA scenario levels."

"War risk is back on, but we are not expecting any material CTA flows across the energy complex. Elsewhere, precious metals will be focused on the Fed, but the bar will be high to shift the underlying bearish forces in the gold market."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Commerzbank’s Carsten Fritsch and Thu Lan Nguyen note that the Gold price has dropped nearly 30% from its January record as higher real yields and hawkish Federal Reserve expectations weigh on the metal. The bank cuts its year-end Gold forecast to USD 4,500 per troy ounce, but still projects a move to USD 5,000 by end-2027 if Fed rates stay unchanged and later fall.

Forecast cut but recovery seen later"We are lowering our year-end gold price forecast to USD 4,500 per troy ounce (previously: USD 4,800). This reflects the significant fall in prices, which can be attributed to the Fed adopting a more hawkish stance than expected."

"Nevertheless, there is potential for the gold price to recover from its current level, as we consider current market expectations of Fed rate hikes to be excessive and anticipate that Fed interest rates will remain unchanged until the end of the year."

"In this scenario, the Fed would likely refrain from raising interest rates and might even cut its key interest rate from mid-2027 onwards, as the 2% target would then be reached in spring 2027. This provides scope for a further price increase next year to USD 5,000 per troy ounce by the end of 2027 (previous forecast: USD 5,200)."

"However, without a reversal in interest rate expectations, a lasting return of ETF investors and a recovery in the gold price are unlikely."

"As long as this remains the case, gold is unlikely to benefit disproportionately from increased demand for safe havens."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

UBS believes gold prices could face further near-term pressure from rising bond yields and easing geopolitical risk, but says any pullback should be viewed as a buying opportunity.

The bank continues to target $5,200 per ounce by mid-2027, arguing that structural demand from central banks and investors remains intact.

The Gold price in US Dollars (XAU/USD) traded around $4,080 on Monday after extending its consolidation around the $4,000 level, well below this year's record highs above $5,300.

Image: XAU/USD 1 year chart The one-year chart shows gold retreating from its March peak above $5,300 before stabilising around the $4,000 level.

UBS believes the broader bull market remains intact despite the correction.

UBS says the precious metal has entered a consolidation phase as investors weigh stronger US economic data against persistent geopolitical uncertainty.

The bank notes that higher Treasury yields and a more cautious outlook for Federal Reserve rate cuts could generate further short-term weakness.

"Near-term risks are skewed towards a deeper pullback."

However, UBS argues that the longer-term investment case has changed little.

"We continue to expect gold to reach USD 5,200/oz by June 2027."

According to the bank, structural demand from central banks remains exceptionally strong, while investors are likely to increase allocations once interest-rate uncertainty begins to fade.

UBS also believes that geopolitical tensions continue to provide an important backstop for prices.

"Periods of weakness should be viewed as opportunities to add exposure."

The bank maintains that any decline towards the $3,850 area would represent an attractive entry point for long-term investors rather than signalling the end of the bull market.

Gold Forecast: UBS Says Structural Drivers Remain Intact UBS expects gold to remain volatile over the coming months as markets respond to changing expectations for US monetary policy.

Even so, the bank believes higher real yields are unlikely to outweigh the combination of central bank buying, continued reserve diversification and safe-haven demand.

"We maintain our constructive longer-term view despite near-term volatility."

Image: Gold price in US Dollars (USD) 1 day chart The one-day chart highlights gold's consolidation around $4,080, with prices struggling to break higher as stronger US yields offset continued safe-haven demand.

While UBS accepts that gold may remain rangebound in the short term, it continues to forecast a renewed advance over the next year, with $5,200 remaining its central price target by mid-2027.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

Gold was among the gainers at the start of the week, as the metal started trading on Monday with gap higher and advanced around 1.5% in Asian trading.

Softer rhetoric in geopolitical front, after US and Iran paused hostilities, opening way for potential diplomatic action, eased inflation concerns and deflated expectations for Fed rate hikes in coming months.

The action weakened the US dollar and provided fresh boost to gold price which probed again through $4100 barrier after the recent weakness found footstep above key $4000 support zone.

The price moved to the upper side of near-term $3950/$4200 range that boosts optimism, however, daily technical structure is improving but still fragile (the price needs to sustain gains above 20DMA ($4072 to keep slight bullish bias, underpinned north-heading 14-d momentum on track to break into positive territory).

In such scenario, $4200 upper breakpoint will remain exposed, with firm break here to generate initial reversal signal and formation of base.

Fundamentals need to remain in current mode (or improve further) to continue underpinning near-term action.

Initial support lays at $4072 (20DMA) followed by $4052 (10DMA) loss of which would hurt fresh bulls and risk retest of range floor.

Res: 4116; 4166; 4182; 4203.
Sup: 4072; 4052; 4021; 4000.

Summary:

Rising crude oil prices and a weakening greenback pushed USD/CAD back below 1.4100, threatening a return to its July downward channel Central bank divergence remains a risk, as a cautious Bank of Canada (BoC) and hawkish Federal Reserve could limit further loonie gains The Bank of Canada’s steady policy rate keeps interest rate differentials tilted in favor of greenback dip-buyers on deeper pullbacks The US dollar briefly halted the Canadian dollar’s recent climb earlier this week. But it started falling again yesterday and still looks weak today. Now trading below 1.4100, around 1.4080, investors wonder if USD/CAD will return to the steady decline it had between late June and mid-July.

What Broke the Downtrend The brief pause in the downtrend had a clear cause. On Monday, the US administration announced new 50% tariffs on various Canadian goods, including wine, dairy, and cement. This action was stated as a response to what the US described as discriminatory practices against American products in Canada.

Canadian Prime Minister Mark Carney called this the latest in a series of unilateral US trade actions. He said Canada had “merely matched” prior US measures. Headlines like that usually hit the loonie first and hardest, which explains why the dollar strengthened Monday and Tuesday.

What Is Driving the Loonie’s Rebound? A significant increase in global crude oil prices is the primary driver behind the Canadian dollar’s resurgence. As a major exporter of commodities, Canada benefits directly from rising crude prices. Oil prices have reached new multi-week highs, which has helped to offset recent domestic challenges and provide strong fundamental support for the Canadian dollar.

Potential Risks Beneath the Surface Despite the current trend, a return to a consistent downtrend is not guaranteed. The tariffs announced on Monday will take effect in 30 days. If trade tensions escalate further before then, sentiment towards Canadian assets could shift negatively, irrespective of oil prices or interest rate movements.

While the current trend favors a stronger Canadian dollar, underlying risks require careful assessment. Uncertainties surrounding the USMCA trade agreement renewal and potential tariff discussions remain significant factors that could strengthen the US dollar if tensions increase.

Market expectations indicate that the Bank of Canada (BoC) might maintain a supportive monetary policy stance, influenced by recent lower domestic consumer price index (CPI) figures. In contrast, persistent US inflation data suggests the Federal Reserve is likely to continue its restrictive monetary policy for a longer period.

Investors should consider USD/CAD with a balanced view. Those expecting further gains in the Canadian dollar might explore strategies that leverage CAD strength, such as hedging US dollar exposure or investing in Canadian assets sensitive to commodity prices.

Effective risk management remains crucial. Diversification and close attention to central bank statements, oil market developments, and trade news will be essential for navigating market fluctuations. Adopting a flexible approach that adapts to evolving data, rather than making large directional bets, is likely to better serve long-term investment goals.

Is USD/CAD returning to its prior downward channel?

The recent weakness in the US dollar suggests a potential return to the late June to mid-July downtrend if current momentum continues.

What risks could impact USD/CAD trajectory?

Trade tensions related to the USMCA, geopolitical shocks in the energy sector, and differing monetary policies between the Federal Reserve and the Bank of Canada present notable risks of upward movement for the pair.

How do central bank interest rate expectations affect the USD/CAD outlook?

A potentially cautious Bank of Canada alongside a hawkish Federal Reserve could limit severe downside losses for USD/CAD.

EUR/CHF may already be telling investors what to expect from today’s European Central Bank meeting. The cross broke decisively above 0.9278 this week, extending its recent rally as surging oil prices revived inflation concerns across Europe. The move suggests markets have begun positioning for a relatively more hawkish ECB even though policymakers are almost universally expected to leave the deposit rate unchanged at 2.25%. With the decision itself largely priced in, attention will instead turn to whether President Christine Lagarde validates—or pushes back against—the hawkish repricing already underway.

The backdrop confronting the Governing Council has changed dramatically since it last met in June. At that meeting, Brent crude was also trading around $95 a barrel, but the trend pointed firmly lower as markets anticipated a breakthrough in US-Iran negotiations. Optimism was soon rewarded with a 60-day ceasefire announced on June 17, sending Brent to around $70 by early July and reinforcing expectations that energy-driven inflation would continue to ease. That narrative has since been turned on its head. The ceasefire has collapsed, military conflict has resumed, shipping risks around the Strait of Hormuz have intensified, and Brent has climbed back above $95. The crucial difference is that oil is now surging rather than falling, fundamentally changing the inflation outlook facing European policymakers.

Financial markets appear to have recognized that shift before the ECB has had a chance to respond. This week’s move in EUR/CHF suggests investors are increasingly pricing a policy outlook that is more hawkish than it appeared only a few weeks ago. While markets are not yet fully convinced another rate hike will follow, they have become less willing to assume June’s increase marked the end of the tightening cycle. The renewed rise in energy prices has reopened the possibility that inflation could prove more persistent than previously expected.

That leaves Lagarde’s press conference carrying far greater significance than the policy announcement itself. Given the speed at which geopolitical developments are evolving, the ECB is unlikely to provide firm forward guidance. The most likely message is that inflation risks have shifted to the upside, uncertainty surrounding the Middle East and the Strait of Hormuz remains exceptionally high, and policy decisions will continue to depend on incoming data. Preserving flexibility is likely to take precedence over signalling a specific policy path.

The key question is whether Lagarde chooses to resist growing market expectations for another rate hike as early as September. Such a question is certain to surface during the press conference. If she explicitly dismisses those expectations, recent Euro gains could fade as markets pare back hawkish bets. On the other hand, if she simply acknowledges heightened inflation risks without challenging current pricing, investors may interpret that as tacit acceptance that another hike remains a live possibility should the energy shock persist.

Meanwhile, EUR/CHF could emerge as the cleaner expression of today’s outcome than EUR/USD. Any hawkish shift from the ECB is likely to be offset by similar expectations that higher oil prices will also keep the Federal Reserve on a tighter path. By contrast, the Swiss National Bank is still widely expected to leave rates unchanged at 0.00% through the remainder of the year, leaving EUR/CHF more directly exposed to changes in ECB expectations.

Technically for EUR/CHF, Wednesday’s break above 0.9278 resumed the rally from March’s 0.8979 low and keeps the pair on course for 100% projection of 0.8979 to 0.9264 from 0.9094 at 0.9379. Just beyond lies the key structural resistance at 0.9394. A sustained break above that level would strengthen the case for a medium-term bullish reversal, reinforcing the view that investors are pricing a widening policy divergence between Frankfurt and Zurich rather than simply reacting to day-to-day geopolitical headlines.

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