International gold prices have persistently failed to breach the critical $4,200 resistance level, experiencing a significant pullback from the highs seen earlier this year. However, a senior commodity strategist has put forward a fresh assessment, suggesting the most severe phase of the concentrated selling pressure observed over recent months has likely concluded, with the gold market transitioning from passive liquidation into a phase of consolidation and base-building.
Weakening US employment data, coupled with signals from the Federal Reserve Chair indicating a moderation in inflation, have led to a sustained cooling of market expectations for interest rate hikes. This shift provides macro-level support for precious metals. While both gold and silver are entering a potential recovery window, their significant differences in market size and supply-demand structures mean their rebound trajectories and volatility ranges are set to diverge noticeably. Short-term technical resistance is still expected to cap the upside potential.
The pivot in macro expectations towards a more accommodative stance is reshaping the pricing logic for precious metals, with Federal Reserve policy expectations at the core. Previously, markets widely anticipated rate hikes within the year, but the weak June jobs report, which added only 57,000 positions, significantly undermined expectations for aggressive monetary tightening.
The Federal Reserve Chair publicly reaffirmed a commitment to price stability while acknowledging that inflation risks have notably eased in recent weeks since taking office, further diminishing the perceived necessity for rate increases.
The strategist noted that with forward inflation expectations plummeting and energy prices declining in tandem, there is currently no sound rationale for continued rate hikes. Once a market consensus forms around this view, the substantial build-up of US dollar long positions could unwind collectively. A weaker US dollar and declining short-term Treasury yields would benefit non-yielding assets like gold from an opportunity-cost perspective. Nevertheless, until the Federal Reserve's policy path becomes entirely clear, gold's recovery path remains fraught with obstacles. The current price is still down 26% from the January peak.
Gold appears to be entering a base-building phase, but multiple technical resistance levels are constraining the rebound's height. Support below the $4,000 level has held for now. However, when gold prices rebounded to the $4,200 zone on Monday, they again encountered selling pressure, with many investors taking the opportunity to reduce holdings on the rally. This is a typical characteristic of recovery following a deep correction and suggests the market requires ample time to build a solid foundation.
From a technical chart perspective, the 200-day moving average around $4,485 represents the first major core resistance. Above that, the 38.2% Fibonacci retracement level of the January-to-June decline sits at $4,574. Only a decisive break above these two key levels would signal a complete strengthening of the technical structure. At present, the current upswing can only be defined as a base-building move. A notable shift in fund behavior is evident, with market operations moving from panic-driven exits to selective bargain-hunting. The subsequent market direction will hinge entirely on whether the macro environment continues to release signals of easing.
Silver has also stabilized and rebounded in tandem, though its dual nature combines supply-demand advantages with high volatility characteristics. The strategist remains optimistic about silver's short-term trajectory. While Monday's rally stalled at $63.27 per ounce, the previous deep decline found support and stabilized around the crucial $55 support zone. The successful return above $60 releases a positive recovery signal.
Silver shares gold's sensitivity to macro interest rate dynamics while possessing its own unique physical supply and demand logic. A persistent structural supply deficit combined with steadily expanding industrial demand provides long-term fundamental support. However, the silver market's circulating size is far smaller than gold's, making its price highly susceptible to short-term fund flows. During a market recovery, trend-following capital can quickly enter and amplify gains, but periods of sentiment reversal can also trigger more intense, concentrated selling, classifying it as a high-beta, high-volatility precious metal.
The steep decline over the past months has severely damaged silver's technical structure and market confidence, meaning the price recovery cycle is likely to be longer than that for gold.
In summary, considering macro policy, fund behavior, and technical charts, the concentrated selling pressure on precious metals has largely been exhausted. Gold has formally entered a range-bound base-building phase, while silver is simultaneously entering a window of stabilization and recovery. Continuously weakening US inflation and employment data are gradually neutralizing the headwind of potential Federal Reserve hikes. However, the multiple technical resistance levels above gold will be difficult to breach quickly in the short term. Silver, underpinned by industrial supply and demand, holds long-term value, but traders must remain vigilant about the transaction risks posed by its inherent high volatility.
Subsequent statements on Federal Reserve policy, along with movements in US Treasury yields and the US dollar, will directly determine the duration of the base-building cycle and the extent of the rebound for both gold and silver.
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