FED Chairman May Bring New Boost to Gold and Silver Prices

According to Ole Hansen - Head of Commodity Strategy at Saxo Bank, the key speech of US Federal Reserve Chairman Jerome Powell at the Jackson Hole conference on Friday could be the next important signal.

In recent weeks, some US economic data has caused a negative surprise. While the stronger-than-expected producer price index (PPI) has reminded the market that inflationary pressures may still come from Donald Trump's tariff policies.

That data has temporarily eased expectations for a series of quick and strong rate cuts, but the market is still pricing in a possibility of a 25 basis point cut at the September FOMC meeting, although the path after that remains uncertain, Hansen said.

Powells Jackson Hole rally will therefore be scrutinized for any change in tone, especially regarding the Feds acceptance of inflation if growth continues to weaken, the expert said.

Hansen also noted that there was much speculation about Powell's successor in May, even as Finance Minister Scott Bessent called for a total rate cut of 150 basis points.

For gold, this uncertainty, combined with a quiet summer market, has led to a tug-of-war situation, holding prices within range, around $3,350/ounce over the past three months, supported by stable investment demand. Silver is also lacking in motivation, as industrial demand and a weak structure and technical factors are strong, but speculators have reduced interest in pushing prices further due to the lack of new catalysts, he said.

According to Hansen, investors are focusing on US monetary policy and the USD. Some developments could become a firebreaker to the current tensions, he said.

Hansen believes that the first and also the most recent possibility is the Fed giving a clearer signal at Jackson Hole or later. The Fed may confirm a rate cut in September and hinted to continue to ease by the end of the year. If this happens, the US dollar could weaken and real yields fall, thereby creating support for both gold and silver.

Weaker labor data, whether from the jobs report or JOLTS, will reinforce expectations of easing and support gold as the USD weakens. Especially if the Fed cuts interest rates despite the re-increase in inflation, he continued.

The third catalyst is escalating geopolitical tensions, as both Ukraine and the Middle East can quickly restart golds safe haven role, Hansen said.

For silver, stronger support measures from China or a sudden explosion of solar power installation could highlight the structural deficit and further tighten the balance.

Hansen concluded that while gold and silver are still stuck in the margin as a catalyst, both markets still maintain a supporting foundation thanks to capital flows and structural demand, with central banks and industrial consumers continuing to absorb supply.

The next big step is likely to require a macro boost most likely an easing signal from the Fed, weaker US economic data or a geopolitical shock. Until then, the precious metal will continue to fluctuate within the range, allowing investors to wait for the return of fluctuations.