Gold and Silver Market Update: Rising Tensions Impact Gold Prices Silver Struggles Near Key Support
Gold prices are rising, recovering about half of Monday’s losses as tensions escalate over potential Iranian retaliation against Israel. Following the death of Hamas leader Ismail Haniyeh last week, Iran has vowed retaliation, heightening fears of a broader conflict in the Middle East. This geopolitical instability is driving investors towards gold as a safe-haven asset.
Gold continues to trade within a defined multi-month range, recently testing and briefly breaking resistance before retreating. The short-term outlook is mixed: the 50-day simple moving average (SMA) is providing support, while the 20-day SMA is acting as resistance. The trend of higher lows remains intact, but a sustained break above $2,485 per ounce is necessary to maintain a series of higher highs.
XAU/USD Daily Price Chart
Source: TradingView, prepared by Richard Miles
Retail trader data indicates that 57.69% of traders are net-long, with a long-to-short ratio of 1.36 to 1. The number of traders net-long has increased by 7.05% from yesterday but is down by 5.31% compared to last week. Conversely, the number of traders net-short has decreased by 9.89% from yesterday and 13.35% from last week.
This net-long positioning suggests that gold prices may continue to decline. The growing net-long sentiment, combined with recent shifts in trader positions, reinforces a bearish contrarian outlook for gold.
Silver has been underperforming compared to gold, experiencing repeated sharp sell-offs since mid-May. The metal is currently trading below both the downward-sloping 20- and 50-day SMAs and is approaching the critical support level of the 200-day SMA. A rough bullish flag pattern has emerged on the daily chart since mid-May, with another sharp sell-off observed yesterday. Silver is nearing a key support zone around $25.90 per ounce, which includes flag support, horizontal support, and the 200-day SMA. If this support area holds, silver could attempt to retest $30 per ounce or higher in the coming weeks.
XAG/USD Daily Price Chart
Source: TradingView, prepared by Richard Miles
Retail trader data reveals that 89.79% of traders are net-long, with a long-to-short ratio of 8.79 to 1. The number of net-long traders is down by 2.05% from yesterday and 8.17% from last week. Meanwhile, the number of net-short traders has decreased by 21.15% from yesterday and 25.10% from last week.
Given the contrarian approach to crowd sentiment, the high percentage of net-long positions suggests that silver prices may continue to decline. The increasing net-long sentiment, combined with recent changes in trader positions, supports a bearish contrarian outlook for silver.
Gold prices have been climbing, recouping approximately half of Monday’s losses due to escalating geopolitical tensions. The recent death of Hamas leader Ismail Haniyeh has prompted Iran to vow retaliation, amplifying fears of a broader Middle Eastern conflict. This uncertainty is pushing investors toward gold as a safe-haven asset. Despite recent gains, gold remains within a well-defined multi-month trading range. It briefly surpassed resistance levels before retreating. Currently, the 50-day simple moving average (SMA) is providing support, while the 20-day SMA is acting as near-term resistance. For gold to sustain a bullish trend, it needs to break and hold above $2,485 per ounce.
In contrast, silver has been lagging, marked by persistent sharp sell-offs since mid-May. The metal is trading below both the downward-sloping 20- and 50-day SMAs and is approaching the critical 200-day SMA. A bullish flag pattern on the daily chart indicates potential support near $25.90 per ounce. If this support holds, silver could test $30 per ounce or higher in the coming weeks. However, with 89.79% of traders net-long, a contrarian outlook suggests that silver prices may face further declines.
