Gold (XAUUSD) & Silver Price Forecast: Weaker Dollar Supports Breakout Trends

Gold and silver prices saw renewed support at the start of the week, buoyed by a weaker US dollar and declining Treasury yields. This movement occurs as investors prepare for upcoming US labor market data, which is expected to significantly influence expectations regarding the Federal Reserve's next policy decisions and the broader interest rate outlook for 2025.

Investor sentiment continues to be shaped by the Federal Reserve's recent 25-basis-point rate cut, which was implemented despite internal disagreement among policymakers. Although the Fed acknowledged persistent inflationary pressures, they also recognized growing uncertainty in the labor market. The division within the Fed was highlighted by two officials who dissented, arguing that inflation remains too high to justify easing monetary policy.

Currently, markets anticipate two rate cuts next year, and the upcoming non-farm payrolls report is considered a crucial indicator for validating these expectations. Should the labor market show signs of cooling, front-end yields would likely remain capped, creating an environment that typically benefits non-yielding assets like gold.

Beyond monetary policy considerations, long-term demand factors continue to support silver. The metal is benefiting from tight global inventories, robust industrial demand, and its designation as a critical mineral by the US, which has enhanced its strategic importance. Year-to-date gains exceeding 100% reflect the combined impact of physical demand and financial inflows.

Institutional developments are also contributing to a positive outlook. India's decision to permit pension funds to invest in gold and silver ETFs has the potential to broaden the investor base and encourage increased allocations to these assets within diversified portfolios.

**Short-Term Forecast**

Gold is currently trading near $4,328 on the 2-hour chart, having extended its bullish breakout from the consolidation range seen in early December. Recent candlestick patterns indicate strong buying pressure followed by brief pauses, suggesting that buyers remain in control while allowing for short-term consolidation. The price has decisively broken above the $4,300 level, which now serves as immediate support. The analysis suggests gold is targeting $4,355–$4,395 while holding $4,300 support.

The overall structure reveals an upward trend supported by an ascending trendline dating back to late November. Gold is maintaining its position well above the 50-EMA (near $4,270) and the 100-EMA (around $4,200), confirming the strength of the trend. A Fibonacci extension of the previous upswing identifies the $4,355–$4,395 range as the next potential upside target, aligning with prior horizontal resistance. Downside support levels are located at $4,300, followed by $4,250. A deeper pullback towards $4,200 would still be consistent with a healthy uptrend. The Relative Strength Index (RSI) is near 65, indicating solid momentum without overbought conditions, favoring continued upward movement rather than exhaustion.

**Silver (XAG/USD) Price Forecast: Technical Outlook**

Silver is trading around $62.65 on the 2-hour chart, having retreated from the $64.50 area, where it briefly tested the upper boundary of a rising channel. Recent candlestick patterns show a sharp rejection followed by smaller-bodied candles, suggesting profit-taking rather than a change in the underlying trend. The price has found short-term stability above $61.45, a key horizontal support level. The forecast suggests silver stabilizes near $62.65, targeting $63.80–$65.55 if $61.45 support holds.

The broader structure remains positive, with silver holding above the ascending channel base and the 50-EMA near $61.90. The long-term trendline from late November remains intact, supporting a higher bias. A Fibonacci retracement of the most recent upswing places the 38.2% level near $61.50, reinforcing the current support. Resistance levels are located at $63.80, followed by $65.55. The RSI is near 55, indicating cooling momentum but not a breakdown, suggesting consolidation within the channel rather than a more significant correction.