Today’s analysis offers a comprehensive overview of the gold and silver markets, highlighting the key fundamental and technical factors shaping current trends. This report is designed to equip investors with the insights needed to navigate these markets with confidence.
Gold continued its upward trajectory on Monday, breaking through the $3,600 per troy ounce level to reach a new record high. This surge is driven by a combination of weaker U.S. economic data, dovish monetary policy expectations, and ongoing geopolitical tensions.
The latest U.S. employment data added to the bullish momentum. The August Nonfarm Payrolls report showed only 22,000 new jobs, well below the forecast of 75,000, marking the fourth consecutive month of weak hiring. Additionally, the unemployment rate rose to 4.3%, the highest level since late 2021. These figures have strengthened expectations for a 25 basis point rate cut by the Federal Reserve later this month.
At the same time, U.S. Treasury yields and the U.S. Dollar remain under pressure, providing further support for gold. On the geopolitical front, Russia launched its largest airstrike of the war on Ukraine over the weekend, resulting in civilian casualties and widespread damage across multiple regions, according to Reuters. This has further fueled safe-haven demand.
Adding to the bullish sentiment is continued central bank buying, with China increasing its gold reserves again last month.
Gold is in a strong uptrend, accelerating higher after decisively breaking above the $3,600 level. The momentum from last week’s rally remains intact.
On the daily chart, technical indicators continue to climb within overbought territory, suggesting the possibility of a near-term pullback or consolidation before the next major move. Despite this, the price remains well-supported, trading above all key moving averages, with the 20-day MA showing increasing upward momentum.
On the 4-hour chart, XAU/USD bounced earlier in the day from a rising 20-period moving average, while the 100 and 200 SMAs are gradually turning higher, though still trailing below the shorter-term average.
Momentum indicators show:
Stochastic Oscillator: 96
Relative Strength Index (RSI): 80
These elevated readings point to extreme bullish conditions, but also signal a potential for short-term consolidation. Nonetheless, the technical outlook remains firmly positive, with risks skewed to the upside in the near term.
Silver continues to follow gold’s bullish momentum and is currently attempting to establish a firm base above the $41.00 level.
From a technical standpoint, the recent minor pullback appears to be a result of profit-taking after a strong upward move over the past two weeks. The retreat is also supported by slightly overbought conditions on the daily chart.
If selling pressure persists, the $40.00 level is expected to act as a key support zone. A decisive break below this level could trigger a deeper correction in XAG/USD.
Momentum Indicators:
Stochastic Oscillator: 91 — indicating overbought conditions
Relative Strength Index (RSI): 71 — also within overbought territory
While silver maintains a bullish near-term outlook, the current overbought signals suggest a possible period of consolidation or mild correction before the next leg higher.
Stochastic Oscillator: A momentum indicator that compares a security’s closing price to its price range over a specified period. Readings above 80 signal overbought conditions, while readings below 20 suggest oversold levels.
Relative Strength Index (RSI): Measures the speed and magnitude of recent price movements to assess potential overbought or oversold conditions. An RSI above 70 indicates overbought territory; below 30 signals oversold.
In today’s dynamic and ever-evolving bullion markets, staying informed through a combination of technical and fundamental analysis is essential for making confident, well-informed investment decisions.
This report aims to provide a balanced and timely perspective on both gold and silver, helping investors better navigate the complexities of the precious metals landscape and identify emerging opportunities.