Gold (CM:XAUUSD) has largely remained flat over the past week. In contrast, silver (CM:XAGUSD) has corrected by nearly 3.7% during this period. Still, both metals could be headed higher over the coming periods amid rising macro headwinds globally. The U.S. Fed’s interest rate path, though, could be the final decider in September.
Despite their recent lackluster performance, both gold and silver are up in the double digits year-to-date. While silver has benefited from buoyant industrial demand (primarily from the solar sector), gold’s role as a haven of safety remains unparalleled.
The Year of Elections
The current global macroeconomic backdrop promises to lend further strength to gold over the coming months. 2024 is shaping up to be the year of elections. While some major elections, such as in India, are behind us, the U.K., France, and the U.S. are next in line.
Global Headwinds
This political uncertainty should act as a catalyst for gold prices. Additionally, the string of geopolitical tensions across Taiwan, Ukraine, the Philippines, and the Middle East means investors will largely flock to the safety of gold. While demand from central banks has been a major driver for gold prices over the past year, this factor could play a less pivotal role over the next few months after China eased its gold-buying pace.
The Fed Factor
The final decider for gold prices this year, though, could still be the U.S. Fed’s interest rate trajectory. Year-to-date, the Fed has flip-flopped between dovish and hawkish commentary while maintaining interest rates at a nearly two-decade high. Today’s PCE inflation numbers could shed some light on where the Fed might be headed. Nevertheless, gold could find new buying support only if the central bank embarks on rate cuts, as lower interest rates make gold more attractive.
Is Gold Bullish or Bearish?
Meanwhile, the TipRanks Technical Analysis tool is flashing a Buy signal for gold on a weekly timeframe. This implies traders could consider going long on the yellow metal over the coming periods.
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