Is there more upside for gold and silver in store?

Federal Reserve Bank of Dallas President Lorie Logan said Monday that she sees more interest rate cuts ahead of the Fed’s policy meeting in November. 

“If the economy evolves as I currently expect, a strategy of gradually lowering the policy rate toward a more normal or neutral level can help manage the risks and achieve our goals,” Logan said in the text of a speech to be delivered before the Securities Industry and Financial Markets Association annual meeting in New York. 

Gold and silver are surging on optimism over US interest rate cuts as more upside in prices are expected in the coming months. 

At the time of writing, gold on COMEX was at $2,736.05 per ounce, up 0.2% from the previous close.

The contract had hit a record high of $2,755.30 per ounce. 

In the case of silver, the December contract on COMEX was at $33.875 per ounce, up 2%. The contract is near a more than 12-year high. 

US economy “strong and stable”

Logan said the US economy is “strong and stable”, but “meaningful uncertainties remain in the outlook” around rising risks for the labour market. 

Logan said:

The Fed “will need to remain nimble and willing to adjust if appropriate.

Logan’s comments come amid widespread expectations that the Fed will cut interest rates by 25 basis points at its November meeting.

The US central bank had cut rates by 50 bps in September, surprising the market. 

The market was expecting another 50 bps rate cut at the beginning of October, but hotter inflation in the US and a resilient labour market have prompted traders to cut back on their expectations. 

China announces cuts to loan rates

China announced slightly bigger-than-expected cuts to both its one-year and five-year prime loan rates. 

Kitco News said:

Still, Chinese authorities have failed to meet market expectations when it comes to fiscal stimulus. 

“Investors have lived on hope, but suffered only disappointment since last month when there were assurances that money would be forthcoming to help shore up China’s troubled property market,” broker SP Angel was quoted by Kitco News.

China’s economy is important for metals demand as the country is one of the biggest consumers of precious metals and base metals. 

Technical outlook for bullion

Experts believe gold prices have more upside potential as any kind of US rate cuts are likely to support sentiments in the market. 

Lower interest rates bring down the borrowing cost for the public, while also increasing the liquidity in the economy.

This makes it easier for more investments in commodities. 

According to Kitco.com, gold prices are expected to build up a strong resistance towards $2,800 per ounce. 

First resistance is seen at $2,775.00 and then at $2,800.00, Kitco said in a report.

Support is seen at $2,708.70 per ounce. 

For silver, the precious metal has a strong overall near-term technical advantage, Kitco said. 

Jim Wyckoff, analyst at Kitco, said in a report:

Silver bulls’ next upside price objective is closing prices above solid technical resistance at $37.50. 

Resistance for silver contracts is seen at $34.75 per ounce, and then at $35 per ounce. Support for silver is at $33.225 per ounce.