Fed Decision Could Trigger Gold Breakout to $5,000
The recent drop in oil prices has eased inflation concerns and pressured bond yields downward. This has led to a correction in the US dollar index, supporting gold and silver price rallies on Monday.
The Federal Reserve's upcoming meeting will be crucial for determining the next move in these precious metals. A hawkish Fed message could push Treasury yields higher, squeezing gold towards $4,000. Silver may also soften under increased interest rates, dampening investment demand and growth prospects.
On the other hand, a more dovish Fed outlook would likely weaken the dollar, supporting a stronger recovery in both metals. Central bank gold buying could continue to bolster gold prices while silver might see even greater gains if lower yields coincide with rising industrial demand.
The daily chart for spot gold shows consolidation above $4,000 and trading towards $4,200. Breaking above this level would push the price towards $4,350, opening the door for a rally to the $5,000 area. This is seen as resistance from a descending broadening wedge pattern.