The recent retreat of gold prices to around $1,900 per ounce and silver prices to the area of $22 per ounce has sparked questions about the future direction of these precious metals. Market participants are eager to determine if gold and silver will find support at these levels, potentially leading to a rebound or a push towards historic highs.
In seeking insights into this matter, we turn to the expertise of financial analyst Craig Erlam. According to Erlam, the expectations surrounding the actions of the Federal Reserve (Fed) play a significant role in shaping the outlook for both gold and silver prices. The impact of Fed decisions on yields and the value of the US dollar cannot be underestimated.
Erlam highlights the recent boost that gold and silver prices received following positive inflation data. This indicates that unless there is a substantial shift in the opposite direction, the current momentum could support prices in the short term. While economic data has been volatile, there is a growing sense of progress. The key lies in the policymakers' interpretation of this progress in the days ahead.
In both cases, a lot comes down to what the Fed is expected to do, and what impact that has on yields and the dollar. As we've seen today, some very encouraging inflation data has given both gold and silver a big lift and unless we see a significant shift the other way, that could support prices in the near term. The economic data has been volatile but it does feel like we're finally seeing progress. We'll see from policymakers over the coming days whether they view recent progress to be substantial enough.
