Gold Sets Sights on $1980 While Silver Eyes July Highs Post Breakout
Over the past month, gold and silver prices have been declining, mainly due to a stronger US dollar and the possibility of continued interest rate hikes by the Fed.
Gold becomes less appealing when interest rates are higher, especially in the long run. The beginning of this week indicates an upward trend, particularly evident in silver, which has experienced a more than 7% increase since Monday.
The pivotal event shaping price trends in the upcoming days will be the central bankers' meeting in Jackson Hole.
Markets are eagerly anticipating remarks from Jerome Powell, the Chair of the Federal Reserve, regarding the ongoing monetary policy.
If his statements lean towards a more accommodative approach, metals will probably experience a spike in demand. Conversely, if a less favorable tone is struck, a more significant market correction might take place.
A strong US dollar and high bond yields often correlate with high interest rates, which weaken gold as an asset since it doesn't generate passive income.
The alternatives, especially inflation-protected Treasury bonds, and traditional bank deposits, are gaining attention due to their increasingly higher returns.
If the Fed decides to continue raising interest rates, gold and silver will remain under selling pressure.
However, it's worth noting that despite the unfavorable macroeconomic backdrop, the valuation of these metals remains relatively high.
Therefore, in the long term, perhaps in the second half of 2024, when the Fed pivots, a bullish period similar to the years 2015-2020 might be in the cards.
Long-term forecasts for silver haven't changed much recently. The demand is expected to steadily increase due to the renewable energy boom, especially in solar panels, which
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