Following the Federal Reserve's rate cut decision, gold and silver continue their strong performance. This week's market focus will shift to Friday's PCE data and the outlook for fourth-quarter rate cuts. Additionally, the Swiss National Bank will announce its interest rate decision this Thursday.

**Last Week's Market Review**

The Federal Reserve resumed rate cuts last week, lowering the rate range to 4%-4.25%, which met market expectations, but internal disagreements persist. Milan, recently nominated by Trump as a board member, advocated for a 50 basis point cut, while the dot plot showed 10 members supporting three or more rate cuts this year, with 9 members believing there should be fewer than three cuts. The economic outlook also raised growth projections for 2025-2027, lowered unemployment expectations for the next two years, while raising inflation expectations for the coming two years. The meeting statement once again emphasized downside risks in the employment market. Rate markets currently price in a 93% probability of another rate cut in October.

Following the rate cut decision, all three major U.S. stock indices hit new all-time highs last week, with the small-cap Russell 2000 index also reaching new highs. Technology giants regained momentum with weekly gains generally outperforming broader market indices. Major European indices closed slightly lower last week, while Asia-Pacific markets continued their hot streak, with the Nikkei index breaking through 45,000 points to reach new highs.

Rate cuts continue to provide momentum for gold bulls, with gold prices rising for five consecutive weeks to close at $2,685. Silver similarly achieved five consecutive weekly gains, surpassing $43 to hit a 14-year high.

As the Fed's statement and economic outlook did not display overly pessimistic expectations, this helped the dollar index halt its decline on a weekly basis, with potential for a short-term rebound. However, from a technical perspective, upside space appears limited. Given the clear differences in monetary policy between major central banks in Europe, the UK (pausing rate cuts), and Japan (potentially raising rates within the year) versus the U.S. (resuming the rate cut cycle), the dollar's medium-term outlook remains concerning. Trade wars initiated by Trump make "de-dollarization" a mainstream expectation in financial markets over longer cycles.

Among non-dollar currencies, the Canadian dollar led gains last week, while the New Zealand and Australian dollars posted the largest declines. The euro and British pound continued slight declines due to their respective fiscal difficulties, with USD/JPY touching 145.50 mid-week before rebounding to close near 148.

The Bank of Japan kept rates unchanged last week, but two committee members favored rate hikes, and leading prime ministerial candidates expressed support for rate increases. Rate markets show above 50% probability of a rate hike within the year.

**This Week's Outlook**

**U.S. August PCE Price Index — Friday 20:30**

Although the Federal Reserve is currently more focused on employment market dynamics, this Friday's PCE data could become the first important data point influencing fourth-quarter rate cut prospects.

Markets broadly expect this PCE reading to rise from 2.6% to 2.7%, with core PCE expected to remain at 2.9%. If data comes in below expectations, markets may fully price in two rate cuts for October and December, potentially providing sustained momentum for U.S. stocks and gold. Conversely, if inflation unexpectedly rises, the above rate cut bets may temporarily cool, providing short-term support for the dollar.

Other U.S. economic data this week includes Thursday's durable goods orders and initial jobless claims. Additionally, numerous Federal Reserve officials will speak this week.

**Swiss National Bank Rate Decision — Thursday 15:30**

The Swiss National Bank lowered its policy rate to 0% in June, creating the lowest benchmark rate level among major central banks. This week is expected to maintain rates unchanged, with market focus on whether it hints at returning to negative rates, though rate markets believe the central bank has ended this round of rate cuts.

Switzerland's near-zero inflation rate and the Swiss franc's strong appreciation are the main reasons for the central bank's aggressive rate cuts this year. Driven by safe-haven sentiment, the Swiss franc has gained 14% against the dollar this year, leading G10 currencies. If the central bank downplays "negative rate" discussions, the franc may continue its strength.

**XAUUSD Gold Technical Analysis**

Under the influence of the Federal Reserve's resumed rate cuts and safe-haven demand (economic slowdown, rising inflation, geopolitical factors), gold's upward trend is expected to continue.

However, gold prices are approaching the 2,700 area on an hourly basis, where there's potential for momentum to slow or for overbought corrections. But with bulls still maintaining complete dominance, downside space may be very limited. Key support to watch below is around 2,665/75 near the trend line. A strong breakthrough above 2,700 would open new upside space. Conversely, if the rally fails while also losing the key 2,628/38 support zone, this would increase the probability of high-level consolidation.

Gold's one-week implied volatility is 14.36%, meaning gold prices will likely fluctuate between 2,610.24-2,759.92 this week, representing a range of approximately $75 above and below last Friday's closing price.