Gold (XAUUSD) & Silver Price Forecast: Middle East Risks Support Gold Is a Breakout Coming?

Gold News: Fed Outlook Challenges Safe-Haven Demand

The fundamentals driving gold and silver markets right now are in a tug-of-war between resilient central bank buying on the one hand, and the expectation that the US Federal Reserve will hold rates higher for longer on the other. Data on stronger-than-expected US retail sales and robust jobs numbers have led many investors to conclude the US economy is still strong, while renewed Middle Eastern hostilities have pushed oil prices higher again, adding to fears of persistent inflation. Both issues make it more challenging for the Fed to lower rates.

With the near-term monetary policy outlook cloudy, gold prices continue to receive support from buying by central banks. According to the World Gold Council, the net purchases of official sector buyers were 41 tonnes in May, driven primarily by Poland (18 tonnes) and China (10 tonnes). WGC also said its latest poll of central bank officials revealed 89% of respondents expect central banks worldwide to add to their gold reserves over the next 12 months, underscoring ongoing efforts to diversify their foreign currency reserves.

Silver continues to enjoy the fundamentals of strong and growing industrial demand as countries ramp up the production of solar cells, electrify their transport sectors and improve the performance of electronics, though the same higher-for-longer rates outlook has led to weaker investment flows into precious metals.                                                                      

Gold Price Analysis Today: XAU/USD Stalls Under $4,021 Resistance

On the 4-hour chart, XAU/USD is priced at about $4,004, trading in a consolidation mode below the descending trendline, but still below the 50-EMA ($4,043) and 100-EMA ($4,081) in the intermediate trend. Bulls could struggle to sustain the recent rally in the $4,021 region, which lines up with the descending trendline and is the first resistance for buyers in the intermediate trend. Immediate support is on $3,976, followed by $3,959. A gain beyond $4,021 could invite buyers towards $4,064 and $4,100 next.

The Relative Strength Index (RSI) for XAU/USD is at 46. Overall, I am slightly biased to the bearish direction for Gold in the short run, considering the price is trading below the moving averages and the descending resistance in the intermediate trend. Buyers must gain a foothold above $4,021 to strengthen their case, with a breach below $3,976 opening the door for further declines to the next lower supports.

Silver Price Analysis Today: XAG/USD Tests Support as Resistance

In the intermediate time frame, Silver (XAG/USD) is trading at around $56.53, rallying off the $54.77 support. While the upside momentum has been paused in the recent period below the previous support at $57.34, which is now acting as resistance. In the intermediate trend, XAG/USD is also trading below the 50-EMA ($57.81) and 100-EMA ($59.49). Above the current ask, resistance is on $57.34, followed by $59.00 and $60.41. In the other direction, sellers could challenge $54.77 ahead of $53.50.

The Relative Strength Index for XAG/USD has reclaimed 46 in the intermediate trend, indicating that momentum may be picking up. From my point of view, if bulls manage to reclaim the $57.34 resistance in the intermediate trend, it would improve the chances of Silver’s recovery in the short term. On the other hand, if the price fails to climb higher and breaks below the support, it could open the doors for further decline to test the most recent lows.