Gold (XAUUSD) & Silver Price Forecast: Middle East Tensions Lift XAU, XAG – CPI Risk Ahead?

Market Overview

Despite the strong US dollar, the Gold (XAU/USD) somehow managed to get its footing back and nudged a bit higher past the 5,170 level. Now the reason it’s clambering upwards is likely all down to the ongoing geopolitical uncertainty which is spurring on demand for gold as a ultra-safe place to hide your cash.

At the same time , concerns about inflation in the US have reduced hopes that the Federal Reserve will cut interest rates anytime soon – which in turn is supporting the US dollar and in effect limiting gold’s gains.

Middle East Tensions Naturally Boost Gold as Investors Flee to Safe Havens

Meanwhile, on the geopolitical front , the fighting in the Middle East shows no signs of letting up – in fact, it’s got even more intense following Iranian officials basically saying they rejected comments from US President Donald Trump that the conflict could be wrapped up soon. Iranian leaders basically told him he was being unrealistic and made it clear that the situation can’t be just decided in Washington.

As it stands, the Islamic Revolutionary Guard Corps is saying Iran itself will decide when it’s time to pack it in, which is only adding to the high tension. And when geopolitical tensions run high, as a rule of thumb investors start moving their money towards ultra-safe assets, which is exactly why gold demand is on the up again.

Rising Oil Prices and US Dollar Keep Gold Gains in Check

On the flip side, we’re also seeing a bit of a spike in energy markets – Crude Oil prices are starting to creep back up after taking a bit of a hit earlier. Now, the main reason for it is concerns that supply disruptions might happen if the Strait of Hormuz gets blocked or restricted – this route is really really important for global oil shipments, so any kind of threat to it sends shivers down the spines of the energy market.

As a result, any rise in oil prices can push inflation up as energy costs affect delivery costs, production and so many everyday goods. If inflation starts rising again, the Federal Reserve might well put the brakes on any plans it had to cut interest rates.

Looking ahead, investors are going to be taking a wait and see approach before putting a lot of faith in gold. We’re waiting with bated breath for some key US inflation data – the Consumer Price Index will be released on Wednesday and the Personal Consumption Expenditures (PCE) Price Index on Friday.

Gold Consolidates Near $5,183 as Trendline Support Holds

Gold (XAU/USD) is trading around the $5,183 mark on the 4H chart, stuck in a tight spot just beneath resistance at $5,276 and still clinging to its rising trendline from late February. Price is getting a bit of support from the 200-EMA at $5,014 and the 50-EMA at $5,175, which is giving a pretty constructive medium-term picture.

Now recent candlesticks are showing smaller bodies with a lot of upper wicks, which is basically a sign of sellers lurking near $5,276-$5,410. But so far nothing too decisive is happening and we’re not seeing that decisive breakdown yet. The RSI has bounced up a bit after dipping below 40, which is telling us that momentum is starting to level out.

If we see gold break above $5,276, it could easily open up the possibility of a trip to $5,410. Conversely, if we do see a break below $5,175 we could well see $5,014 get tested for support.

Silver Tests $89 as Ascending Trendline and $85 Support Hold

Silver (XAG/USD) is trading near the $89.15 level on the 4H chart, coming up against that level of resistance around $91.20 while still holding comfortably above that key $85.45 support zone. Price is still respecting that rising trendline from early February, which is reinforcing a pretty constructive medium-term picture.

The 50 EMA has crossed above the 200 EMA and both averages are now pretty flat at $84-$86, which is basically giving us a bit of extra dynamic support. Recent candles have been showing steady higher lows after that pull back to $80.50 – that looks like a pretty good sign of accumulation to me, rather than a sign of distribution.

RSI has bounced back up towards 60, which is basically telling us that momentum is on the up, but we’re not over the top just yet. If we do see silver break above $91.20 we might just see a run up to $96. On the other hand, if we lose $85 we’d risk seeing a retest of $80.