Gold Forecast Bright On Weak USD; Silver Eyes Multi-Year High

Outlook for Gold and Silver Prices: Bullish Amid Weak US Dollar

  • Gold price action advanced for the fourth consecutive week as Treasury yields slipped.
  • Silver prices jumped to multi-year highs amid US dollar weakness, infrastructure talks.
  • Gold and silver outlook remains constructive in light of the Fed staying dovish on policy.

Precious metals like gold and silver extended their stretch of gains last week. Gold prices climbed 1.5% to $1,905/oz, while silver popped 1.9% to trade around the $28.00-price level.

This likely follows sustained US dollar weakness and headwinds faced by Treasury yields owing to the Fed’s patiently dovish position on monetary policy. The outlook for gold and silver has benefited from FOMC officials undermining the taper debate as they argue recent inflationary pressures are “largely transitory.”

Gold Price Time Chart: Daily Time Frame (Dec. 14, 2020 - May 28, 2021)

Gold Price Chart Forecast

Chart by @RichDvorakFX created using TradingView

With actual inflation rising in the near-term but not enough to warrant a Federal Reserve policy response, Treasury yields and the US dollar have turned lower. Gold price action has catapulted higher in turn. This bullish trend behind gold looks likely to persist so long as the Fed remains committed to its accommodative stance and continues to delay talks of tapering asset purchases.

Gold prices might even be headed for all-time highs if the US dollar weakens further and Treasury yields extend their slide. Not to mention, with major cryptocurrencies like bitcoin (BITCOMP) facing heavy selling pressure as of late, investors might look to more traditional anti-fiat assets like gold and silver.

If the US dollar stages a sharp rebound, however, it would likely correspond with a spike in Treasury bond yields caused by the market pricing in the threat of Fed tapering. That could weigh negatively on gold prices and spoil the recent rally.

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Alex Johnson 3 weeks ago Contributor's comment

Please correct me if I'm wrong but a weak dollar would naturally push gold up?