The falling oil prices reduced inflation fears and put downward pressure on bond yields. This introduced a correction in the U.S. dollar index. These developments supported the rally in gold and silver prices on Monday.
But the key event for the week is the Federal Reserve meeting, which will be crucial in making the next move in gold and silver. If the Fed’s message is hawkish, then it could lead to higher Treasury yields and squeeze gold towards the $4 000 handle. Silver could also soften on the back of higher rates, dampening investment demand and growth prospects.
Conversely, a more dovish Fed outlook would help to provide a stronger recovery in both metals as the dollar will weaken. But the central bank gold buying could keep supporting gold while silver might do even better if lower yields coincide with rising industrial demand.
Gold Price Forecast: $4,200 Breakout Could Open the Door to $5,000
The daily chart for spot gold shows that the price has been consolidating above the $4,000 area and trading towards $4,200. The resistance at $4,200 is defined by the descending trend line that is stretching from March 2026 highs.
A break above $4,200 will push the price towards $4,350 and a break above $4,350 will open the door for a rally towards the $5,000 area. This area is seen by the resistance of the descending broadening wedge pattern.