The yellow metal has seen another rather subdued week of trading, with prices maintaining a quiet sideways range.
The main focus this week was on the FOMC on Wednesday. The Fed delivered a message of caution and concern, citing a great deal of uncertainty in the outlook.
This has capped the US dollar upside, for now, keeping gold prices supported.
The Fed went into detail regarding its new inflation targeting policy which has recently shifted away from targeting 2% inflation. It is now allowing inflation to run hotter, aiming to achieve an average of 2% inflation.
With this new shift, the Fed has essentially signaled to the market that it should no longer expect rates to be lifted as inflation hits 2%. It has also reassured traders that rates will be kept at current levels until 2023.
With this in mind, the outlook for gold remains bullish with plenty of scope for further upside in the medium term.
Gold Holding Above Trend Line Support
Gold prices continue to test the bullish trend line from 2020 lows with prices hovering around the trend line as of writing.
The range between 1980.66 resistance and support at 1919.92 has framed price action since early August following the correction from the 20173.74 highs.
While support holds at the 1919.92 level, the medium-term bias remains bullish with a focus on an eventual continuation of the bullish trend
Silver has traded in line with gold prices this week. The market has maintained a fairly steady, subdued course of price action reflecting the lack of momentum in the market.
The Fed’s message has capped the dollar upside and has seen equities markets remaining well bid. This has, in turn, been supportive of silver.
News of better industrial production in the eurozone this week is also encouraging for the silver demand outlook. It keeps the medium-term view bullish here.
The movement of the dollar over the coming quarter will be key to determining the oath of silver. However, again, given the vanishing US rate hike expectations, the outlook for the dollar appears subdued.
This should see silver retaining support.
Silver Prices Remain Range-Bound
Silver prices continue to hover around the 27.4502 level which has acted as resistance again this week.
With price still well above the rising trend line from 2020 lows and the 25.1018 support the focus remains on continued upside with the 30.1117 level the main target for bulls.