Gold (XAUUSD) & Silver Price Forecast: Iran Tensions Fuel Volatility – Will Gold Test $5,020?

Market Overview

Gold (XAU/USD) hanging in there near 5150, mainly because a rocketing US Dollar and Treasury yields are giving it a hard time. However, the idea of Gold as a safe haven is being rather undermined by all this “higher for longer” talk on interest rates and its attendant “opportunity cost” worries

The Main Things Going On

• Oil Price Shock: We saw oil prices jump by over 6% after those tanker attacks in the Persian Gulf and the whole mess with Israel, the US and Iran just got a whole lot hotter.
• Price Inflation: Those February inflation numbers were okay-ish (headline CPI at 3.1% – no change) but this is the bit that’s got the IMF getting a bit anxious – sustained high oil prices could start to really drive up global inflation, which I think we’d all agree would be a bit of a problem.
• Interest Rates: All the chatter about Fed rate cuts has taken a bit of a hit lately due to fears of rising energy costs – looks like the central bank may keep the squeeze on to keep inflation in check.

What’s Coming Up

Trade volatility is going to stay with us for a bit as traders go from headlines to the facts. Todays initial Jobless Claims will give us a better look at the labour market, but the thing everyone is really watching is this Friday’s US PCE Price Index, the Fed’s preferred inflation gauge. Gold’s next move largely depends on how that pans out.

Gold Price Forecast: $5,160 Holds Above Key Support – Break Toward $5,239 or Pullback to $5,016?

Gold is trading in the $5,160 ballpark on the 2-hour chart, hanging in there just above the $5,123 line of support after a pretty wild rollercoaster ride that took it from a peak of $5,410 just a little while ago. Price is right now stuck in a holding pattern between $5,123 and $5,239, a reflection of the general confusion and indecision in the market in the aftermath of that sharp correction we saw earlier this month.

The RSI is hovering around that 45-50 region, which is basically saying that momentum is neutral, so we’re not really getting any kind of strong or clear reading from it right now. If Gold price manages to take out $5,239 decisively, then it could be back on its way to $5,331 and beyond – maybe even all the way back to $5,410.

On the flipside, if it breaks below $5,123 then things could get a bit riskier, and we might see the price start to slide all the way down to $5,016 and then possibly even $4,936.

Silver Price Forecast: $84.42 Support in Focus – Break Above $89 or Drop Toward $79?

Silver is hovering around $86.33 on the 2 hour chart, settling back into place right on top of that crucial $84.42 support line after a pretty wild pullback from its $96 peak. The price is basically going back & forth between the 50-EMA & a spot just above the 200-EMA indicating some short term stability, but within a larger uptrend picture.

The little blue demand zone that’s between $84 & $85 has been a magnet for buying interest, and that trend line that started rising back in mid-February is still holding in there keeping those higher lows intact.

The RSI is slowly starting to drift towards that 45-50 mark which is basically a middle-of-the-road momentum reading now that the price has been bounced around by the recent rejection at $89.70.

Get a good break above $89 though and maybe you see some upside to $92.99 and $96.20, on the flip side though if we do start to break below $84.42 then we could be looking at some serious trouble with that $79.66 support line.