Today’s analysis offers a comprehensive overview of the gold and silver markets, highlighting the fundamental and technical factors that are shaping current trends. Our report is designed to equip investors with the insights necessary for effective navigation of these markets.
Gold prices have attracted renewed interest, trading above $2,850 at the start of a pivotal week for U.S. inflation data. However, rising fears of a trade war may limit further upside for gold, as increased demand for the U.S. dollar as a safe haven comes into play. After a decline in the dollar following the U.S. Nonfarm Payrolls (NFP) report, risk aversion resurfaced on Friday, providing the dollar with renewed strength and causing gold to retreat from its recent all-time high of $2,887.
In the upcoming days, if risk-off sentiment intensifies or if traders begin to take profits on their short positions in the dollar ahead of Wednesday’s U.S. CPI inflation data, the dollar may continue its recovery. In such scenarios, gold’s upside potential appears constrained. Nonetheless, supportive factors such as dovish expectations from the Federal Reserve, hopes for stimulus in China, and ongoing trade war concerns are likely to cushion any declines in gold prices.
Gold confirmed a Bull Cross on the four-hour chart after closing above the falling trendline resistance at $2,862 during Friday’s Asian session. The price subsequently reached a new lifetime high of $2,887 before settling around $2,860. The metal has maintained support at the 21-four hourly Simple Moving Average (SMA) now positioned at $2,864.
Currently, gold is bouncing off the 21-day SMA, aiming for stability above the $2,880 level. The next significant target lies at the $2,900 mark, beyond which the psychological level of $2,950 could be tested. The Relative Strength Index (RSI) is trending upward and remains above the midline, currently near 76, indicating potential for further gains.
Conversely, a sustained drop below the 21-four hourly SMA at $2,864 could lead to a quicker decline towards the 50-four hourly SMA at $2,824. Key support for gold buyers is identified at the $2,800 level. The Stochastic Oscillator is at 83, reinforcing the bullish momentum alongside the RSI at 76.
Silver prices may face initial resistance at their three-month high of $32.65, which was last reached on February 7 and coincides with the upper boundary of the ascending channel. A decisive breakout above this level could reinforce the bullish trend, potentially propelling the XAG/USD pair toward the psychological level of $33.00.
On the downside, support is located at the nine-day EMA at $31.71, followed by the 14-day EMA at $31.44, and the lower boundary of the ascending channel at $31.10. Currently, the short-term Stochastic Oscillator is at 75, while the Relative Strength Index (RSI) stands at 61, indicating a healthy upward momentum in the silver market.
In the dynamic and intricate landscape of bullion markets, it is essential to stay informed through both technical and fundamental analysis to make sound investment decisions. Our report aims to deliver a balanced perspective, helping investors effectively navigate the complexities of gold and silver trading.