Gold and silver prices could be heading for another strong rally, according to Peter McGuire, CEO of Trading.com. McGuire expects gold to potentially reach $4,600 per ounce, while silver could climb to $70 per ounce by the end of August, as a combination of a weaker US dollar, expectations around Federal Reserve policy and geopolitical uncertainty continues to support demand for precious metals.
His bullish outlook comes as gold and silver have already recorded strong gains in August. Gold moved above $4,400 per ounce earlier this week, while silver climbed to around $66 per ounce. Reuters reported that spot gold rose to $4,417.24 on August 17, while silver gained 2.1% to $66.01.
Peter McGuire’s Gold and Silver Price Targets
McGuire’s latest forecast puts gold at $4,600 per ounce by the end of August, while he sees silver reaching $70 per ounce.
Gold could benefit from expectations that the Federal Reserve may adopt a less aggressive monetary-policy stance. Softer US economic data has reduced expectations of another rate hike, putting pressure on the US dollar and supporting dollar-denominated commodities.
Silver, meanwhile, has been supported by both investment demand and its industrial applications, making its price movement potentially more volatile than gold.
- One of the biggest drivers behind the bullish gold outlook is the US dollar.
- A weaker dollar generally makes gold cheaper for international buyers, potentially increasing demand. The dollar recently fell to a two-month low as expectations of another Federal Reserve rate hike declined. Gold responded by moving higher.
- The Federal Reserve is therefore likely to remain one of the most important factors for gold investors.
If economic data continues to soften and inflation pressures remain manageable, markets could increasingly price in a less restrictive Fed policy. Lower interest-rate expectations can reduce the opportunity cost of holding gold, which does not pay interest. The direction of US monetary policy could determine whether gold sustains its latest rally.
Recent economic data has caused markets to reassess the likelihood of another rate increase. Reuters reported that expectations for a September Fed rate hike had fallen significantly, while investors were waiting for the Federal Reserve’s July meeting minutes for further clues.
For gold, the combination of:
- A weaker US dollar
- Softer economic data
- Expectations of less aggressive Fed policy
- Continued geopolitical uncertainty
- Strong central-bank demand
- Geopolitical tensions remain another important factor for precious metals.
- Rising Crude Oil Prices Add Another Layer of Uncertainty
Uncertainty surrounding the US-Iran situation and potential disruptions in the Middle East have contributed to volatility across commodities and financial markets. Gold traditionally attracts safe-haven demand when investors become concerned about geopolitical or financial risks. Oil prices have also moved higher amid concerns about potential supply disruptions.Higher crude prices can have two opposing effects on gold.On one hand, geopolitical tensions and inflation concerns can increase demand for gold as a hedge. On the other hand, persistently higher oil prices can increase inflation expectations and potentially make the Federal Reserve more cautious about cutting rates. That could push Treasury yields higher and create short-term pressure on gold.
This means investors should not assume that higher crude automatically means higher gold.
Silver Could Outperform Gold
The more aggressive part of McGuire’s forecast concerns silver.His $70 target would represent another move higher from the approximately $66 level reached on August 17.Silver has recently shown considerable momentum. Reuters reported that silver gained 2.1% on August 17 to $66.01 per ounce. Silver also has an important difference compared with gold: it has substantial industrial demand. The metal is used across areas including electronics, solar energy, electrical applications and other industrial sectors. Consequently, silver prices can be influenced by both investment demand and the global economic cycle. This dual demand profile can create significant upside during periods when investment flows and industrial demand strengthen simultaneousl
