Gold (XAUUSD) & Silver Price Forecast: $5,000 Clash as Dollar Firms – Break or Reversal?

Market Overview

Gold price (XAU/USD) managed to stop its previous-day losses and regained some bullish traction around above 4,935 level, showing 1.16% gains on the day. However, the reason behind this recovery is still not clear because multiple factors are against the gold right now, including easing geopolitical tensions and a stronger U.S. dollar.

It is worth noting, the yellow metal dropped more than 2% overnight due to the signs of progress in U.S.–Iran negotiations. But it managed to regain traction later and maybe we can link this to thin trading volumes. Several major regional markets closed for the Lunar New Year holiday.

Silver Recovers Amid Thin Holiday Trading

Meanwhile, Silver (XAG/USD) is trading at 75.58, posting gains of 2.79%. However, the metal recovered alongside gold after its overnight losses,. However, the thin trading volumes during the Lunar New Year holidays limiting the movement in price.

Gold Loses Shine as U.S.–Iran Talks Boost Risk Sentiment

The global market sentiment had been mostly up during this week so far and the reason could be the ongoing progress in U.S.–Iran negotiations. On Tuesday, Iranian Foreign Minister Abbas Araqchi said that while the U.S. and Iran have agreed on the main “guiding principles” in their nuclear talks, it doesn’t mean a deal is right around the corner. As a result, investors seem not interested in safe-haven assets like gold.

Moreover, the losses were further bolstered by the stronger U.S. dollar. As of now, the US Dollar Index is trading at 97.24, showing 0.12% gains. However, the gains in the dollar came after the expectations for early U.S. interest rate cuts have faded.

Investors are now waiting for the minutes from the Federal Reserve’s January policy meeting, including details from the Federal Open Market Committee (FOMC), for more clues about future rate decisions.

Gold Price Outlook: $4,860 Trendline Test Sets Up $5,000 Decision

Gold on the 4-hour chart is really stuck between a downtrend line coming from about $5,300, and a support line that’s creeping up from around $4,860, all squished into a tight little triangle. Price is holding its own above that 0.382 Fibonacci level at $4,859, and then keeps on falling back down when it tries to get above $5,000 resistance.

The 50 period moving average is starting to sit around $5,000, while the 200 period average is heading in the opposite direction, around $4,860, – that’s a pretty strong support cluster. If Gold does break above $5,000, it could open up the way to $5,141, while if price drops below $4,860, we can see it head all the way down to $4,685.

Trade idea: Buy when Gold gets above $5,000, and see if you can squeeze out $5,141, but be prepared to get out if price goes below $4,860.

Silver Price Outlook: $72 Support Meets Descending Trendline Pressure

Silver on the 4 hour chart is currently hanging around $75.86 after bouncing off that support line around $72, and that line is looking pretty significant at the moment. Still, price cant get a break above that downtrend line that stretches all the way back to the $100 high, so the bigger picture is still pretty under pressure.

The 50 period moving average is heading down around $79.20, while the 200 period one is sitting pretty high up at $86.10, so there’s a pretty solid wall of resistance between. Resistance is at $79.20 and $86.11, and then if price breaks through the $72 support line, we start talking about $70.37 and $64.14.

Trade idea: Buy when Silver gets above $79.20, and try and knock out $86.11, but be prepared to get out if price goes below $72.00.