Gold (XAUUSD) & Silver Price Forecast: Inflation Fears Rise – Can Gold Hold the $5k Mark?

Market Overview

Gold (XAU/USD) started this week on the mild bearish track but remain above $5,000 level on Monday. However, the precious metal faced mild selling pressure as investors seems cautious ahead of key monetary policy announcements from major central banks this week.

Apart from the Fed, the Reserve Bank of Australia (RBA), the Bank of Japan (BoJ), the European Central Bank (ECB), and the Bank of England (BoE) are scheduled to announce their monetary policy decisions this week.

At the same time, ongoing geopolitical tensions in the Middle East were seen as a supportive factor for gold price.

Tensions Rise as US and Israel Take Different Approaches on Iran

As per the latest report, the Trump administration in the US says the conflict with Iran could end in a few weeks, maybe even sooner. Meanwhile, Israel’s military sees it differently, saying their operations could continue for at least three more weeks. This shows even allies are not on the same page about the timeline.

On the flip side, US forces reportedly targeted every military site on Kharg Island, a key Iranian oil export hub. In response, Iran warned that it could retaliate against any oil facilities in the region linked to the United States. As a result, markets remain tense and investors are avoiding to take big positions.

Gold Faces Pressure as Rising Oil Prices and Inflation Worries Influence Markets

Although geopolitical conflicts usually support gold prices due to increased safe-haven demand, the current situation has also boost the oil prices. Higher energy costs have raised concerns about rising inflation, which is influencing expectations for global monetary policy.

As a result, markets are increasingly expecting the US Federal Reserve to delay interest rate cuts. Higher interest rates generally put pressure on assets like gold.

Investors Watch Global Central Banks Amid Geopolitical Tensions

Apart from this, several major institutions are scheduled to announce their monetary policy decisions, including the Federal Reserve, the Reserve Bank of Australia (RBA), the Bank of Japan (BoJ), the European Central Bank (ECB), and the Bank of England (BoE).

Most central banks are expected to keep interest rates the same for now, but the Reserve Bank of Australia may raise rates again because inflation is still high.

Gold Breaks $5,000 Triangle Support, Bears Eye $4,925

Gold (XAUUSD) is flirting with $4,989 on the 2 hour chart right now after Gold just fell below that $5,019 support line and the lower end of a well known descending triangle. A string of nasty bearish candlesticks here pushed price under both the 50 period moving average at $5,129 and that 200 period MA hanging out around $5,019, and that’s telling us sellers are getting all the momentum here.

The bearish break out of that compression pattern tells us sellers are eyeing higher risk areas. Our RSI is currently hovering around 30, which is really starting to look bearish and pushing towards over sold territory. Gold is looking for support at $4,966 now, then $4,925, while resistance now looks like it is at $5,019, and $5,129.

Trade idea: If we see Gold trade below $5,000 we think it’s a good idea to sell, aiming for $4,925 and stop the loss if it goes above $5,050.

Silver Breaks $80 Support, Triangle Signals Deeper Pullback

Silver (XAGUSD) is sitting near $79.15 on the 2 hour chart after it fell below that $81.68 support zone that it used to bounce off of sometimes. The breakdown pushed price under a rising trendline and confirmed the weakness in the big picture descending triangle that started from that $92.99 high.

We noticed that a few bearish candlesticks have shown up and they are sticking the landing as price continues to trade below those 50 period and 200 period MAs at $84 and above $86. Momentum is basically non existent with our RSI around 35. Silver is looking for immediate support at $78.39, then $75.53. Resistance is now at $81.68.

Trade idea: If we see Silver trade below $80 we think it’s a good idea to sell, aiming for $78.40 and stop the loss if it manages to get above $82.