The price of gold is holding steady this week while the price of silver dropped slightly as traders turned their focus to the Fed’s next move. September silver futures saw their price drop to $38.83 while December gold futures rose to $3420 an ounce.
This comes after Chairman of the Federal Reserve Jerome Powell delivered a speech last week where he hinted that the Fed would probably reduce interest rates next month. Powell gave his speech at the recent Federal Reserve Central Bank symposium where he highlighted that economic growth was stagnating and inflation risks were increasing.
His remarks fueled optimism among precious metals traders, who typically benefit when borrowing costs reduce.
However, not all policymakers agree with this move. Some Fed officials argue that with inflation still above the Fed’s 2% target and trending higher, cutting rates too soon could risk further price instability.
One factor sharpening this debate is the latest U.S. jobs data. July employment came in much weaker than expected with just 73,000 jobs added, which was significantly lower than the 105,000 estimate. More striking were the heavy revisions to earlier reports. May’s job gains were revised to 19,000 from over 140,000 while June was revised to only 14,000 from 147,000.
At the same time, tariffs imposed in recent months are weighing on U.S. economic growth and straining the global trading system. Combined with inflation and slower hiring, this mix has left policymakers facing difficult trade-offs.
From a technical standpoint, bulls have the advantage right now in gold, with the objective being to push the price of the precious metal above $3500. On the other hand, sellers are working towards reducing the price of gold futures lower than the $3319.20 an ounce recorded this last month.
First resistance observed during the recent high was $3450 while first support clocked $3353.40 an ounce. According to Wyckoff’s market rating of 6.5, this suggests that gold is leaning bullish.
In the near-term, silver futures bulls have the overall technical advantage. Bulls are currently in control, with their objective being to push prices above last month’s high of $39.91 an ounce. On the other hand, sellers want to bring the metal’s price down to last month’s low of $36.28 an ounce.
First resistance observed during the recent high was $39.91while first support clocked $37.50 an ounce. According to Wyckoff’s market rating of 7.0, this suggests that silver is even more bullish than gold.
Gold industry players like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) will be following the price movements of gold as the Fed meeting looms and other market factors exert their influence on bullion.
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