Gold and Silver Price Forecast: Iran Talks Lift Metals as Oil Prices Fall

President Trump announced that the US will start holding new talks with Iran on Monday. He also canceled strikes that were scheduled as Iran and several U.S. allies requested additional time to reach an agreement. Saudi Arabia, the United Arab Emirates and Qatar urged the U.S. not to take military action.

The oil price crashed after Trump’s announcement of the talks. Brent crude fell to $84, while WTI oil dropped to $80. The market is looking for a potential deal to ease the risk to shipping traffic through the Strait of Hormuz. The decline in oil prices could help mitigate inflation concerns and signal expectations of reduced interest rates. These conditions support the gold (XAU) and silver (XAG) prices.

Gold and silver opened slightly higher on Monday as oil prices dropped significantly. But the metals are trading within tight consolidation and are looking for a confirmed breakout to move in any direction.

Gold Price Technical Analysis: Falling Wedge Puts $4,200 Breakout in Focus

The daily chart for spot gold shows that the price has been compressing within the edges of the falling wedge pattern between the $3,950 and $4,200 areas.

A break from this range will define the next move in the gold market.
However, the falling wedge pattern usually represents bullish price action if the price breaks to the upside. Therefore, a break above $4,200 may trigger a strong move toward $4,500.

The price remains below the 200-day SMA and below the midline of the RSI, which keeps the price in a negative trend.

The 4-hour chart for spot gold also shows the formation of a falling wedge pattern, whereby the lower support now remains at $3,800.
A break above $4,150 may confirm an early bottom and initiate a rally toward the $4,200 area.

The formation of the falling wedge pattern and consolidation during the past few weeks indicate that the short term direction remains uncertain.

Silver Price Technical Analysis: $55 Support Holds as Price Consolidates

The daily chart for spot silver also shows similar consolidation between $55 and $64. The price has not shown any significant movement since June and remains between $55 and $64. A break from either of these levels will push the price in the next direction.

A break below $55 may push the price toward the long term support region between the $45 and $55 areas. The RSI remains below the midline, and the price consolidates below the 50 and 200-day SMA, which indicates a negative short term trend in the silver market.

The 4-hour chart for spot silver also shows the formation of a descending wedge pattern. The lower boundary of support is $54. A break below this level may push the price toward the $50. The 4-hour chart also shows the key resistance of $72, as the daily and weekly charts show.

Bottom Line

Gold and silver remain uncertain as the market waits for the outcome of the US-Iran talks. A successful deal may reduce the safe haven demand, but lower oil prices could ease inflation fears and reduce the expectations of rate hike. Gold needs to break above $4,200 to confirm a bullish move toward $4,500. But a break below $3,950 may increase pressure toward $3,800. Silver must hold above $55 and break $64 to improve its short term outlook. Until these levels break, both metals may continue to consolidate.

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