ATFX: Gold and silver are approaching a decisive pressure test that could determine the sustainability of their recent rebound. Following the Fed's final rate cut of 2025, gold joined silver in hitting multi-day highs last week, with both metals nearing their October peaks before retreating on Friday as the dollar rebounded and investors locked in profits. Despite the pullback, gold still posted a weekly gain of over 2%, while silver surged more than 6%.
Two dissenting Fed presidents—Chicago Fed's Austan Goolsbee and Kansas City Fed's Jeff Schmid—explained their votes against the rate cut. Goolsbee cited caution due to delayed economic reports from the government shutdown, while Schmid maintained that inflation "remains too high."
This price action suggests the precious metals market is building momentum for a year-end rally, though the path may be volatile. The core bullish drivers remain intact: the Fed's rate-cut cycle continues to underpin the metals' strength. Technically, gold's retreat still leaves it near record highs, signaling a healthy correction, while silver's five-day streak of new highs indicates even stronger momentum than gold.
The October highs represent a critical psychological and technical resistance level. A decisive breakout could attract trend-following capital and open further upside. Potential catalysts for continued strength include: - Confirmation of the Fed's dovish path: Any hints of additional 2025 rate cuts or prolonged low rates would directly benefit gold. - Weakening economic data: Signs of cooling U.S. employment or consumption could accelerate rate-cut expectations, boosting zero-yield gold. - Geopolitical risks: Ongoing uncertainties should sustain safe-haven demand. - Silver's dual appeal: Industrial applications (green energy, solar, electronics) add upside potential alongside its monetary attributes.
This week's U.S. November nonfarm payrolls and CPI reports will serve as key catalysts. A scenario of slowing job growth and easing inflation would likely propel gold and silver through resistance, potentially sparking a new rally. Conversely, robust employment and sticky inflation could trigger a dollar rebound and rate-hike expectations, pressuring metals—though dips may be seen as buying opportunities. The precious metals market now stands at a crossroads between long-term bullish trends and short-term data fluctuations, with these reports acting as the litmus test for a year-end breakout.
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