Gold (XAUUSD) & Silver Price Forecast: Iran-US Strike Chaos—Can Gold Defy a 6-Week High USD?

Market Overview

During the European trading session, the Gold XAU/USD saw a bit of a rebound after taking a nearly 5% hit the previous session. It’s currently trading at 5,154 after a pretty decent bounce of 1.30%. But don’t let that fool you, the recovery mainly came as investors took a step back to reassess how badly they really needed gold as a safe haven given all the escalating U.S.-Iran tensions.

In contrast, the stronger U.S. dollar, bolstered by investors increasingly looking to gold for safe-haven and reducing their expectations that the Federal Reserve would be cutting rates super aggressively , is what kept gold from getting any further gains

Geopolitical Tensions Give Gold A Good Leg Up

The situation in the Middle East is getting worse, and that’s only making markets more bearish, which has resulted in a big boost to safe-haven demand and, in turn, supported gold prices. The US and Iran are going back and forth with U.S. strikes on, and Iranian targets prompting some pretty serious threats from Tehran to boot.

Meanwhile, worrying about possible energy supply disruptions near key shipping routes is pushing oil prices up and is making a lot of people nervous about inflation, and that is only making gold attractive to investors.

Dollar Strength is A Bit of a Gold Price Headache

On the U.S. front, the U.S. dollar has got a whole lot stronger and rose 0.7% overnight to a 6 week high basically because investors are getting a little more nervous about safe-haven demand and the reduced expectations for super aggressive rate cuts by the Federal Reserve. That said, the stronger dollar does make gold a lot more expensive for people with other currencies and so that is a dampener on international demand.

Looking ahead, while investors are keeping a close eye on what’s going on between the US and Iran, as well as important economic indicators like treasury yields and oil prices, gold is going to continue to be pretty closely tied to what’s happening in the Middle East and also the shifting fortunes of the US dollar.

Gold Price Forecast: XAU/USD Tests $5,193 Resistance After Sharp Pullback

Gold is trading around $5,159, trying to steady itself after a pretty brutal rejection at the top of its channel near $5,420. The break below the middle channel support and the serious bearish expansion candle we saw yesterday are pretty good signs that the short-term trend is running out of steam.

Now, price is just consolidating below a key former support area at $5,193, and guess what – it’s just flipped into resistance.

If gold can’t get back above $5,193 then things are looking pretty grim – watch out for $5,078 and $4,995. But, if it can somehow manage to break above $5,276 then the bears will be in trouble and the path to $5,420 is back open.

Silver Price Forecast: XAG/USD Tests $85 Resistance After Sharp Rebound

Silver is trading at $84.81 on the 2 hour chart: still trying to recover from that sharp fall from $96.20. The bounce from $79.16 support was quite strong – those rejection wicks on the chart tell us that there are a lot of folks wanting to buy in on the dip. However, the price now needs to get past a key supply area around $85.45 – that’s the spot where the price consolidated previously and where the 200 EMA is sitting.

The short-term picture is looking a bit bearish, though – that 50 EMA is sloping down while the 200 EMA is flat. You can see the RSI has bounced back up into the mid-40s from a low near 30, but it’s still not looking like the price is really in control yet.

If we do manage to break through that $85.45 resistance zone we might see price start to press up toward $88 and $91.17. But on the other hand, if we can’t get past that level, another pullback to $82 or even $79.16 could be on the cards.