Gold (XAUUSD) & Silver Price Forecast: $5,000 Holds as Silver Eyes $85 Breakout?
LONDON (February 20) Gold (XAU/USD) managed to break through the $5000 barrier but it’s still mired in a holding pattern – traders seem to be holding out for some real clarity from the upcoming US economic data before deciding what to do next. And there are two big reports to watch – the Advance Q4 GDP and the PCE Price Index – these two are pretty important indicators of just how strong the US economy is and whether inflation is starting to get out of control.
At the same time, concerns that the US Federal Reserve is in no hurry to cut interest rates are also propping up the US dollar, which, of course, isn’t great news for gold prices. But in the meantime, simmering tensions between the US and other major countries are giving gold a bit of a lift.
So for now, the gold price is effectively in limbo, with traders looking to see what the next set of US economic data really says before deciding which way to bet.
Fed Signals No Rush on Rate Cuts as US Job Market Remains Strong
It’s worth remembering that the Federal Reserve minutes from their January meeting made it pretty clear that the central bank is under no pressure to slash interest rates anytime soon. In fact, some officials were even talking up the possibility of raising rates again if inflation doesn’t start to slow down like they think it should.
On top of that we’ve just seen yet more economic data showing the US job market is still going strong. Put all that together with more hawkish comments from Fed officials and investors are now starting to rethink their expectations for a serious rate cut.
As a result, the US dollar has gone from strength to strength and has now reached its highest level in months – and that’s all bad news for gold.
Gold Gains Support Amid Rising US-Iran Tensions
On the geopolitical front, President Donald Trump sent out a pretty stern warning to Iran on Thursday – telling them they have to get a nuclear deal sorted within 10 to 15 days or else. Iran’s response to UN Secretary General Antonio Guterres was that they don’t want war but that if anyone attacks them, then Iran will hit back – and they might even hit some key military targets in the region.
Which of course, just increases the chances of a wider conflict breaking out in the Middle East, and that’s good news for Gold, because we all know how well it tends to do when tensions start to rise.
Gold (XAU/USD) Reclaims $5,000 – Fibonacci Support Holds as $5,141 Comes Into Focus
Gold – Chart
Gold is currently trading just shy of $5,027 on the 4 hour chart after snapping back up to the $5,000 level. Which was probably a relief to a lot of people, after the recent drop from $5,598 to $4,402- not a pleasant ride. But it’s worth noting that this rebound stopped right on the 0.5 Fibonacci retracement at $5,000 – a pretty key pivot point. And price is being given a helping hand by the 50-period Exponential Moving Average hovering around $4,990.
You can see higher lows forming along an upward-trending line, and the 200-period Exponential Moving Average near $4,860 is also looking out for gold’s back. The relative strength index is at 55, which is a pretty stable reading. And then there’s the question of what happens next. Resistance looms large at $5,141 – which just so happens to be the 0.618 Fibonacci – after that its $5,303.
Trade idea: Buy gold if it’s over $5,145 – and target $5,300 – stop loss below $4,990.
Silver (XAG/USD) Breaks Above $80 – Triangle Compression Signals $85 Test?
Silver is trading right around $80.69 on the 4 hour chart after finally breaking above $78.44 resistance. Which is a pretty big deal, especially since it signals that silver is out of the contracting triangle that had formed between the $98.08 high and $64.14 low.
The last few days have shown some pretty sustained buying, and thats backed up by the bull candles on the chart. Silver has also got the upper hand on the 50-period Exponential Moving Average, which is hovering around $79.00.
The 200-period Exponential Moving Average at $85.59 is looking pretty like the next major hurdle. The relative strength index, at 60, suggests this is pretty good news for silver bulls. Immediate resistance sits at $85.59, followed by $92.14. Support remains at $78.44.
FXEmpire
