The Fed Pivot is on

There is high confidence in upcoming interest rate cuts in the U.S., making alternatives like bond investments less attractive. Jerome Powell and his buddies are no longer concerned with inflation, as U.S. jobs data came in weak it’s this, rather than inflation data, that will be under the microscope of the U.S. monetary policymakers. This positive change in tune has given the markets added confidence while the dollar weakens. Geopolitical uncertainty arising from the conflicts in Israel (and its neighbours), Ukraine (and now Russia), along with the upcoming U.S. election, continues to drive investors towards gold as they seek shelter in safe haven assets in an increasingly turbulent world. And, with weaker currency on the horizon from the freshly printed money, it’s a wonderful time to be a precious metals investor.

Gold 4 hourly chart – Marking the time of Powell’s speech

Gold daily chart

Gold’s uptrend is showing continued strength as it pushes to a new all-time high (again) of over US$2,500. The recent pullback in price closed neatly on the 50% Fibonacci retracement level and previous high, indicating the move up is probable to continue.

Silver 4 hourly chart - Marking the time of Powell’s speech

Silver daily chart

The price of silver has been choppy in recent times as gold has stolen the limelight. After breaching highs around US$30 set four years ago in May, it failed to hold above that level and is now trying to break through again. With the price up around 13% from the low of US$26.449 in early August, it’s taking some effort to clear overhead resistance. Given the economic and political environment, as well as a global supply shortage thanks to green energy demand sources, it feels particularly “cheap”. This can be seen as a more accessible investment option to people seeking scarce assets.

U.S. Dollar Index daily chart

After a period of dollar strength from 2021 to 2023, the DXY chart suggests a potential for a decline as accommodation monetary policy looms, and the weakening in the dollar both helping to boost the price of gold and silver.