XAU/USD Current price: $2,370.03

• Financial markets struggle with sentiment amid Middle East tensions, on-hold central banks.
• US Government bond yields are in retreat mode after reaching fresh 2024 highs.
• XAU/USD giving modest signs of an imminent bearish correction.

Spot Gold eased on Wednesday after being unable to surpass the $2,400 mark for a second consecutive day. The US Dollar trades marginally lower against its major rivals despite resurgent risk aversion following Wall Street’s opening. Asian stocks traded mixed, but European indexes were mostly up, as market players seemed to accept interest rate cuts in the United States (US) are on hold for now. However, US indexes quickly turned south at the beginning of the session, undermining the sentiment.

Tensions in the Middle East weigh on the mood. Israel is preparing some retaliation on Iran after the latter launched a massive attack over the weekend despite being advised against it. Furthermore, talks between Israel and Hamas to reach a cease-fire have been interrupted.

Meanwhile, US government bond yields are retreating. After flirting with 2024 highs, the 10-year Treasury note offers 4.60%, down 5 basis points (bps), while the 2-year note is down 4 bps, now yielding 4.92%

XAU/USD short-term technical outlook

XAU/USD trades near $2,370, and the daily chart shows that the slide may continue. Technical indicators retreat from extreme overbought levels, suggesting the decline may continue. Still, a steeper slide remains out of the picture, as XAU/USD refuses to give up while developing its moving averages above all. The 20 Simple Moving Average (SMA) maintains its firmly bullish slope at around $2,281 and roughly $300 above an also bullish 100 SMA.

The 4-hour chart shows XAU/USD extending its slide below a mildly bearish 20 SMA, which is also supportive of a downward extension. The longer moving averages maintain their bullish slopes far below the current level, but technical indicators support the bearish case. The Relative Strength Index (RSI) indicator is extending its slide sub-50, while the Momentum indicator heads firmly south but still above its midline.

 Support levels: 2,359.80 2,345.20 2,333.20

Resistance levels: 2,380.70 2,393.50 2,409.20  

Geopolitical Impact on Silver

The recent military actions between Iran and Israel, marking the first such aggression in over three decades, have stoked fears of a broader conflict, prompting investors to turn to silver as a safe-haven asset. The movement in silver prices is predominantly driven by these geopolitical events.

Economic Indicators and Federal Reserve’s Stance

The surge in U.S. retail sales indicates a robust economic momentum as Q1 concluded, which has adjusted expectations around the Federal Reserve’s monetary policy. The market has now scaled back its anticipation of interest rate cuts, expecting fewer adjustments by year-end. Federal Reserve Chair Jerome Powell emphasized the necessity of maintaining restrictive monetary policy longer to manage inflation and economic strength, which has influenced both the dollar’s strength and Treasury yields.

Challenges to Upward Momentum

In the short term, silver prices might face downward pressure as the initial geopolitical premium dissipates. However, ongoing central bank purchases of gold bullion provide a floor to potential declines in silver. The strategic nature of these purchases often makes them less sensitive to fluctuations in silver prices. Looking forward, the sustained high interest rate environment in the U.S. and a robust dollar may continue to challenge silver’s upward momentum.

Short-Term Market Forecast

Given the Federal Reserve’s current stance on interest rates and the ongoing economic strength in the U.S., the outlook for silver remains neutral in the near term. The dual pressure from a stronger dollar and higher yields could temper gains from safe-haven demand, likely leading to a stabilization or slight decrease in silver prices in the coming weeks.

Technical Analysis

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Stuck Inside Consolidation

Monday’s bearish breakdown below support of the 20-Day MA, 50-Day MA, and long-term downtrend line confirmed the continued development of a bearish pennant consolidation pattern. Nonetheless, there is no signal until natural gas breaks out of the pattern. The small symmetrical triangle pennant is bearish because it resides within a larger downtrend. If a downside breakout occurs the chance for the trend to continue lower increases.

Choppy Price Action Until Breakout Likely

Alternatively, an upside breakout triggers a bullish reversal that has the potential to see further strengthening. Initial signs of either a bullish or bearish breakout occur on a move through one of the two boundary lines. However, more reliable signals will be provided on a rise above the most recent swing high at 1.94 or a drop below the last swing low at 1.59. If natural gas reaches the lower boundary line of the pennant and support is seen, the chance for a rally back towards to top line is likely once there is a sign of a bullish reversal. In other words, if natural gas trades inside the pennant, choppy price action will likely continue.

Long-Term Resistance Held During Recent Rallies

The two most recent rallies encountered resistance around previous support from the prior trend lows of February and April 2023 (green and red arrows). That is a logical area to encounter resistance in a downtrend and encountering resistance there supports a bearish continuation of trend. Moreover, the lower dashed blue line in a falling parallel trend channel further marked a similar resistance area.

If a breakdown does occur there is a shelf of long-term support going down to a low of 1.44. That low last provided support at the trend low from 2020. Further, it was the lowest price seen in natural gas since 1995.

For a look at all of today’s economic events, check out our economic calendar.

The average annual price of Brent crude oil stood at 83 U.S. dollars per barrel in 2024. This is according to preliminary data from March. This is nearly 20 U.S. dollars lower than the 2022 annual average, when an energy supply shortage and concerns over fallout from the Russia-Ukraine war saw prices surge. Brent is the world’s leading price benchmark for Atlantic basin crude oils. Crude oil is one of the most closely observed commodity prices as it influences costs across all stages of the production process and consequently alters the price of consumer goods as well.

What determines crude oil benchmarks?

In the past decade, crude oil prices have been especially volatile. Their inherent inelasticity regarding short-term changes in demand and supply means that oil prices are erratic by nature. However, since the 2009 financial crisis, many commercial developments have greatly contributed to price volatility; such as economic growth by BRIC countries like China and India, and the advent of hydraulic fracturing and horizontal drilling in the U.S. The outbreak of the coronavirus pandemic and the Russia-Ukraine war are examples of geopolitical events dictating prices.

Light crude oils – Brent and WTI

Brent Crude is considered a classification of sweet light crude oil and acts as a benchmark price for oil around the world. It is considered a sweet light crude oil due to its low sulfur content and a low density and may be easily refined into gasoline. This oil originates in the North Sea and comprises several different oil blends, including Brent Blend and Ekofisk crude. Often, this crude oil is refined in Northwest Europe.

Another sweet light oil often referenced alongside UK Brent is West Texas Intermediate (WTI). WTI oil prices amounted to 77.58 U.S. dollars per barrel in 2023.

XAU/USD Current price: $2,393.71

• Financial markets are in risk-on mode amid a potential escalation in Middle East tensions.
• The odds for a Federal Reserve rate cut in July dropped to roughly 41%.
• XAU/USD resumed its advance after a brief downward correction, could reach fresh all-time highs.

XAU/USD extends its recovery on Tuesday, approaching the $2,400 threshold mid-American session. Gold started the week on the back foot, sliding towards  $2,324.12 on Monday, but slowly recovered the ground lost amid a persistently sour market mood.  

Market players keep dropping bets on a Federal Reserve (Fed) rate cut in July, currently betting on a roughly 41% chance of happening. Strong United States (US) data coupled with concerns about the Middle East conflict between Iran and Israel will push inflation back up amid upward pressure in oil prices.

Asian and European indexes closed in the red, reflecting market fears, while Wall Street trades mixed. The Dow Jones Industrial Average (DJIA) managed to bounce back, but the Nasdaq and the S&P500 remain under pressure, weighed by the tech sector.

Fed Chairman Jerome Powell will participate in a panel discussion with other central banks’ authorities, although he is not expected to surprise markets. If something, Powell may reaffirm the Fed’s hawkish stance, further weighing on the market sentiment. Meanwhile, the Israeli war cabinet finished its post-Iran attack over the weekend, and news outlets indicate retaliation is coming.

XAU/USD short-term technical outlook

From a technical point of view, XAU/USD is poised to extend gains. The daily chart shows technical indicators resumed their advances after correcting extreme overbought conditions, with the pair posting a higher high and a higher low. Additionally, all moving averages head firmly south, well below the current level, reflecting persistent buying interest.

In the near term, and according to the 4-hour chart, the bullish case is even more evident. XAU/USD met intraday buyers around a bullish 20 SMA, now bouncing sharply from the indicator. The 100 and 200 SMAs, in the meantime, maintain their bullish slopes below the shorter one. Finally, technical indicators resumed their advances, with the Relative Strength Index (RSI) indicator accelerating north around 63.

Support levels: 2,391.80 2,378.05 2,363.35

Resistance levels: 2,409.20 2,431.43 2,450.00

XAU/USD Current price: $2,393.71

• Financial markets are in risk-on mode amid a potential escalation in Middle East tensions.
• The odds for a Federal Reserve rate cut in July dropped to roughly 41%.
• XAU/USD resumed its advance after a brief downward correction, could reach fresh all-time highs.

XAU/USD extends its recovery on Tuesday, approaching the $2,400 threshold mid-American session. Gold started the week on the back foot, sliding towards  $2,324.12 on Monday, but slowly recovered the ground lost amid a persistently sour market mood.  

Market players keep dropping bets on a Federal Reserve (Fed) rate cut in July, currently betting on a roughly 41% chance of happening. Strong United States (US) data coupled with concerns about the Middle East conflict between Iran and Israel will push inflation back up amid upward pressure in oil prices.

Asian and European indexes closed in the red, reflecting market fears, while Wall Street trades mixed. The Dow Jones Industrial Average (DJIA) managed to bounce back, but the Nasdaq and the S&P500 remain under pressure, weighed by the tech sector.

Fed Chairman Jerome Powell will participate in a panel discussion with other central banks’ authorities, although he is not expected to surprise markets. If something, Powell may reaffirm the Fed’s hawkish stance, further weighing on the market sentiment. Meanwhile, the Israeli war cabinet finished its post-Iran attack over the weekend, and news outlets indicate retaliation is coming.

XAU/USD short-term technical outlook

From a technical point of view, XAU/USD is poised to extend gains. The daily chart shows technical indicators resumed their advances after correcting extreme overbought conditions, with the pair posting a higher high and a higher low. Additionally, all moving averages head firmly south, well below the current level, reflecting persistent buying interest.

In the near term, and according to the 4-hour chart, the bullish case is even more evident. XAU/USD met intraday buyers around a bullish 20 SMA, now bouncing sharply from the indicator. The 100 and 200 SMAs, in the meantime, maintain their bullish slopes below the shorter one. Finally, technical indicators resumed their advances, with the Relative Strength Index (RSI) indicator accelerating north around 63.

Support levels: 2,391.80 2,378.05 2,363.35

Resistance levels: 2,409.20 2,431.43 2,450.00

Gold’s technical outlook indicates a modest increase of 0.08%, bringing the price to $23,384.79. Currently, gold is holding slightly above the pivotal $2,370.67 mark. Resistance levels are observed at $2,403.98, with subsequent limits at $2,431.98 and $2,459.86 that could restrain further advances.

Support is initially positioned at $2,323.92, with additional fallbacks at $2,296.85 and $2,268.55 should the price retreat. The 50-day Exponential Moving Average (EMA) is at $2,337.46, while the 200-day EMA stands at $2,226.21, indicating potential support zones.

The market is currently observing a consolidation near the $2,084 level, and the formation of a doji candle at $2,385 suggests there could be a temporary bearish correction towards $2,370 before any upward movement resumes. The technical stance is bullish above $2,370.67, but a drop below this level could trigger a sharp decline in prices.

However, Iran’s efforts to avoid further escalation could alleviate immediate concerns about major conflicts, potentially bolstering market sentiment. Consequently, this improvement in risk sentiment may exert negative pressure on safe-haven assets like silver (XAG/USD), as investors pivot towards riskier alternatives, diminishing demand for safe-haven options.

Market participants are closely monitoring geopolitical developments in the Middle East, recognizing their significant influence on market sentiment and commodity prices.

Speculations on Federal Reserve’s Rate Policy and Its Impact on Silver Price (XAG/USD)

Expectations of a delay in anticipated rate cuts have emerged, with the first cut now anticipated in September rather than June. This shift in expectations is driven by concerns regarding persistent inflation and a robust US economy. The anticipation of prolonged higher interest rates has implications for precious metal prices, including Silver.

Higher interest rates typically strengthen the US dollar, rendering dollar-denominated commodities like Silver relatively more expensive for investors using other currencies. Consequently, this scenario may constrain the upside potential for Silver prices in the immediate future.

Impact of Upbeat US Retail Sales Data on Silver Price (XAG/USD)

 

The Silver price (XAG/USD) has been impacted by the release of upbeat US Retail Sales data for March. The data, reported by the US Census Bureau, revealed a 0.7% month-on-month (MoM) increase, surpassing expectations of a 0.3% rise. This robust growth, exceeding the previous month’s revised figure of 0.9%, reflects strong consumer spending and hints at potential inflationary pressures ahead.

XAU/USD Current price: $2,341.03

• The yield on the 10-year Treasury note hit its highest since mid-2023.
• Tensions between Israel and Iran undermine the market mood.
• XAU/USD consolidates around its daily opening, may extend its corrective slide.

Gold consolidates around $2,350 a troy ounce on Monday, struggling to find directional strength in a risk-averse environment. XAU/USD hit an all-time high of $2,431.43 on Friday but closed the day in the red amid continued US Dollar demand combined with profit-taking ahead of the weekly close.

Weekend news kept concerns alive as Iran launched a massive attack on Israel, spurring fears of an Israeli retaliation. Western allies called for the latter to avoid escalating the conflict, but it’s unclear what Israeli Prime Minister Benjamin Netanyahu could do next. Netanyahu is discussing with its cabinet whether or not they will hit back at Iran. Tensions affected Oil prices the most but also backed demand for the Greenback.

The US Dollar is also benefiting from running Treasury yields. The 10-year note currently offers 4.64%, up 13 basis points (bps) and its highest since June 2023. The 2-year note yields 4.94%, up modest 6 bps. Meanwhile, Wall Street battles to reverse Friday’s losses, with the three major indexes trading mixed.

XAU/USD short-term technical outlook

The daily chart for the XAU/USD pair shows it may extend its corrective slide. The pair posted a lower low and lower high but remains above all its moving averages, with a firmly bullish 20 Simple Moving Average (SMA) providing dynamic support at around $2,259.00. Technical indicators, in the meantime, retreated from their recent highs but remain within overbought readings.

In the near term, and according to the 4-hour chart, the risk of a downward extension has increased. A flat 20 SMA caps advances at around $2,356.00, while the longer moving averages are partially losing their upward momentum. The Momentum indicator stands just above its 100 level trying to resume its advance, while the Relative Strength Index (RSI) indicator gains downward traction around 49. The bearish case will be stronger if XAU/USD breaks through $2,319.20, a strong support level.

Support levels: 2,333.80. 2,319.20 2,303.80  

Resistance levels: 2,356.10 2,365.25 2,380.00  

XAU/USD Current price: $2,341.03

• The yield on the 10-year Treasury note hit its highest since mid-2023.
• Tensions between Israel and Iran undermine the market mood.
• XAU/USD consolidates around its daily opening, may extend its corrective slide.

Gold consolidates around $2,350 a troy ounce on Monday, struggling to find directional strength in a risk-averse environment. XAU/USD hit an all-time high of $2,431.43 on Friday but closed the day in the red amid continued US Dollar demand combined with profit-taking ahead of the weekly close.

Weekend news kept concerns alive as Iran launched a massive attack on Israel, spurring fears of an Israeli retaliation. Western allies called for the latter to avoid escalating the conflict, but it’s unclear what Israeli Prime Minister Benjamin Netanyahu could do next. Netanyahu is discussing with its cabinet whether or not they will hit back at Iran. Tensions affected Oil prices the most but also backed demand for the Greenback.

The US Dollar is also benefiting from running Treasury yields. The 10-year note currently offers 4.64%, up 13 basis points (bps) and its highest since June 2023. The 2-year note yields 4.94%, up modest 6 bps. Meanwhile, Wall Street battles to reverse Friday’s losses, with the three major indexes trading mixed.

XAU/USD short-term technical outlook

The daily chart for the XAU/USD pair shows it may extend its corrective slide. The pair posted a lower low and lower high but remains above all its moving averages, with a firmly bullish 20 Simple Moving Average (SMA) providing dynamic support at around $2,259.00. Technical indicators, in the meantime, retreated from their recent highs but remain within overbought readings.

In the near term, and according to the 4-hour chart, the risk of a downward extension has increased. A flat 20 SMA caps advances at around $2,356.00, while the longer moving averages are partially losing their upward momentum. The Momentum indicator stands just above its 100 level trying to resume its advance, while the Relative Strength Index (RSI) indicator gains downward traction around 49. The bearish case will be stronger if XAU/USD breaks through $2,319.20, a strong support level.

Support levels: 2,333.80. 2,319.20 2,303.80  

Resistance levels: 2,356.10 2,365.25 2,380.00  

Recent Signs of Strength Hit with Resistance

Recent attempts to strengthen the price of natural gas have been met with failures. Last week’s swing high of 1.94 completed a lower swing high, relative to the higher March 1 swing high. Further, recent strength was met resistance below lower blue dashed parallel channel line. In other words, the dashed line represents potential resistance, and evidence for resistance was seen. Such behavior reflects continued downward pressure on the price of natural gas, which was confirmed with today’s breakdown.

Moving Average Support Zone Fails

Notice that the downtrend line, orange 50-Day MA, and purple 20-Day MA had all converged around the same potential support zone. There was a clear chance for the zone to reject price to the upside and it has failed to materialize. Instead, a bearish breakdown has been triggered, putting short-term price action in alignment with the larger bearish trend. A breakdown from consolidation is first indicated on a drop below the lower boundary line, but more so on a decline below the most recent swing low at 1.59.

Range Bound Until Pennant Breakout

Regardless of the bearish nature of the pennant pattern, it won’t matter much until there is a breakout of the pattern. Choppy range bound trading is likely for the time being if the pennant continues to evolve. Certainly, the pattern could evolve for a while longer with trading contained within its boundaries. Therefore, a bounce off the lower boundary line could eventually lead to a test of resistance at the top line of the pattern. At that point, a bullish reversal may also be a possibility. Given recent history, an upside breakout would be triggered on a rally above the most recent seeing high at 1.94.

For a look at all of today’s economic events, check out our economic calendar.