Gold (XAUUSD) & Silver Price Forecast: Warship Sunk, Will Gold Smash the $5,200 Wall?
LONDON (March 5) Gold (XAU/USD) just kept on rolling with that bullish trend, staying well bid above the $5,170 mark. The price hit an intraday high just shy of $5,195. But the reasons behind this upswing in gold are a bit more complicated than you’d think.
First off, investors are getting a little spooked as things in the Middle East are heating up. As a result, they’re moving their money into things that are perceived as safe, and one of the top choices is gold – no surprise there.
Second, the US dollar has been losing ground ahead of the weekly Jobless Claims report later on Thursday. Plus, Federal Reserve official Michelle Bowman is set to give a speech, which is all adding to the dollar’s troubles. When the dollar weakens, gold becomes cheaper for investors using other currencies, which in turn tends to drive up demand.
So, all in all, a mix of rising tensions and a softer US dollar are pushing people towards gold as a safe-haven asset.
Gold Soars as Middle East Tensions Keep Investors on Edge
Gold is in high demand right now, all thanks to the growing tensions in the Middle East. However, the situation in the Middle East just got even more volatile after a US ship sank an Iranian warship off the coast of international waters, prompting Iran to launch a barrage of missiles and go after some critical energy infrastructure.
Things just got a lot murkier when Iran denied reports that they had been in secret talks with Washington to try and put an end to the conflict – they’re calling those claims a complete fabrication. This ongoing instability is keeping global investors glued to gold, which is helping to drive up prices.
Gold Keeps on Rising as Dollar Falls – Thanks to Everything Except the Data
Another major factor at play here is the dollar’s weakness, and that’s not changing anytime soon. Traders are just sitting tight, waiting for the US weekly Jobless Claims report later on Thursday.
But, we did get some data out in the form of a PMI reading – the ISM Services PMI index came in at 56.1 in February, which is a pretty healthy increase from the previous month’s 53.8 and well ahead of what many people were expecting (53.5).
That’s all, suggesting that the US economy is doing pretty well. In fact, it’s looking so good that the Federal Reserve might actually keep interest rates higher for a bit longer. However, the US dollar is still trying to find its footing, even with that strong data.
Gold Price Analysis: $5,193 Support in Focus as Channel Structure Holds
Gold – Chart
Gold (XAU/USD) is chugging along at $5,165, clinging to the underside of the $5,193 resistance zone that previously did duty as a support level. Price remains contained within a rising channel, but more and more lately, we are seeing those prices poking above the channel top – with long upper wicks near $5,420, all that says to me is the sellers are getting a little anxious to step in.
That sharp bearish plunge to $5,080 was followed by some pretty uneventful candles, the kind that suggest the short-term picture is consolidating rather than anything more dramatic.
The 50-EMAs are sort of flat-lining just above $5,240, while the 200-EMAs are still very much staying on the rise around $5,120, which to me looks pretty constructive when I look at the bigger picture. The RSI, not having a clue, stuck in the middle, at 50, reflects just how neutral the momentum is at the moment. A break above $5,193 opens the doors to $5,276 & $5,360, but if that doesn’t happen, we risk seeing a visit to $5,080.
Trade idea: Buy above $5,200, aiming for $5,276, stop below $5,120.
Silver Price Forecast: $85.44 Resistance Tests Short-Term Recovery
Silver – Chart
Silver (XAG/USD) is stuck at $84.44 and trading in a tight range, just below the $85.44 resistance zone which just so happens to be where the 200-EMA is & also a previous point where silver broke down from. We saw a pretty sharp drop from $96.20, but silver has since been forming higher lows above the trendline at $79.16, which suggests buyers are in fact defending the structure & stopping the price falling further.
The 50-EMA is actually trending downwards around $88.00 – which to me suggests its the next major hurdle we need to get past. If silver can close above $85.44 then all bets are off & we could see a run at $88.00 – but if we don’t get that then you can bet your bottom dollar we are going to revisit $82.00.
FXEmpir
