An evaluation of and futures across multiple timeframes indicates that both , with geopolitical risk contributing to market indecision, as previously discussed.
However, gold and silver futures rose on Wednesday as U.S. Treasury bond yields fell after data showed that December retail sales growth stalled, signaling a softening economy ahead of key job data.
Undoubtedly, lower U.S. yields (the interest rate paid on government bonds) reduce the opportunity cost (the benefit given up by choosing one investment over another) of holding non-yielding assets such as gold and silver. They often occur alongside macroeconomic shifts, such as expectations of slower economic growth or more accommodative monetary policy, both of which tend to support precious metals.
I observed that since the last few weeks, gold and silver have become very dislocated from fundamentals, so it pretty much decoupled from interest rate policy, while lower yields are obviously supportive of gold and silver today.
But both the gold and silver futures tend to remain volatile, as the Federal Reserve Bank of Cleveland President Beth Hammack said on Tuesday that the U.S. central bank faces no urgency to change the setting of interest rates this year amid a “cautiously optimistic” outlook for economic activity.
I find that both the gold and silver futures are waiting for the final outcome of the meeting between Netanyahu, who is supposed to discuss potential Iran strikes with Trump today.
Undoubtedly, Israel remains skeptical that nascent negotiations between the US and Iran will succeed, but is pressing to ensure its interests are protected – as well as to preserve Israel’s freedom of military action under any potential agreement.
In such a scenario, Netanyahu would also find it difficult to publicly criticize Trump, who is widely regarded in Israel as the most pro-Israel US president to date. During Trump’s previous term, Israel refrained from military action against Iran while the nuclear agreement was in effect, despite repeated threats and assertions that it was not bound by the deal.
Technical Levels to Watch
Gold
In a daily chart, gold futures are trading in a narrow range after opening the day at $5,064.49, testing the day’s high at $5,8791, and the day’s low at $5,050.81, currently trading with a gain of 0.82%.
I observed that the gold futures are indicating elevated indecisiveness as trading below the immediate resistance at $5,124.40, and holding above the immediate support at the 9 EMA ($5,002.70). The ’EMA’ (Exponential Moving Average) is a type of moving average that gives more weight to recent prices. The futures could take a directional move once the meeting between U.S. President Donald Trump and Israel’s Prime Minister is completed.
Undoubtedly, a breakout above the immediate resistance could open some avenue for the bulls, but this will attract big bears to command the scenario while they are waiting to open their shorts if gold futures find a breakdown below the immediate support at the 9 EMA, where a breakdown could accelerate the selling spree.
Silver
In a daily chart, silver futures, after opening the day at $81.135, testing the day’s high at $82.558, and the day’s low at $81.853, are currently trading with a gain of approximately 1.85%.
I observed that silver futures are looking weaker than gold, as currently trading below the formation of a bearish crossover, as the 9 EMA ($83.652) has come below the 20 EMA ($84.654) while the silver futures are trading at $81.81.
Undoubtedly, this situation looks evident enough for a steep fall if Israel remains unsuccessful in convincing US President Trump for a military action against Israel.
Spot Gold-Silver Ratio
The Spot gold and silver ratio () is currently holding above a significant support at 61.27, indicating a sharp reversal from the current levels, and if it finds a breakout above the immediate resistance at 66.33 in today’s session, gold and silver futures will likely experience a sharp selloff.
Disclaimer: Readers are advised to take any position in gold and silver at their own risk, as this analysis is based only on observations.
