Gold is up nearly 2% today, rallying on the back of the Middle East ceasefire to around $4,800, while silver has moved above $77 per ounce, gaining almost 6%. The prospect of lower oil prices and the reopening of the Strait of Hormuz appears to be easing inflation risks and, by extension, the outlook for further monetary tightening by central banks. The new market momentum has weighed on the dollar today, triggering an almost 0.8% rebound in EURUSD, while the weaker US currency is providing additional support for inflows into precious metals. A calmer situation in energy markets is also raising hopes for more stable industrial demand for silver, which should support the fundamentals behind the rebound — provided that the two-week ceasefire between the US, Israel and Iran evolves into a lasting peace in the Middle East and ultimately results in a final peace agreement. For now, that scenario is possible, but far from certain. Iran continues to maintain fairly maximalist objectives in the negotiations, including full control over the Strait of Hormuz, the right to pursue a civilian nuclear program, and the lifting of sanctions.
GOLD and SILVER (D1 charts)
Gold pulled back after reaching $4,850 (the 50-day EMA, orange line), and a break above that level now appears to be the key challenge for bulls. It is worth noting that the price has recently responded positively, moving back above the 200-day EMA (red line) and initiating a new upward impulse. In a downside scenario, the area around $4,350 could prove to be a very important support level; from the recent local low, gold has already rebounded by nearly 20%.
Source: xStation5
Silver is trading today at its highest level since March 18, but it still remains far below the levels seen as recently as late January, when it was priced at nearly $120 per ounce. As with gold, the area around $65 currently appears to be an important support level for silver.
Source: xStation5
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