Key Takeaways:
Gold prices reclaimed the $4,561 level on Monday, May 25, as oil prices fell sharply on rising optimism for a US-Iran ceasefire agreement that could normalize traffic through the Strait of Hormuz.
"Any political agreement or economic understanding between the two sides would have a direct impact on oil, gold, and silver prices," said Rania Gule, senior market analyst for MENA at x.com. Gule anticipates a potential short-term decline of two to five percent in gold prices due to reduced safe-haven demand, but sees the drop as limited due to underlying support from expected US interest rate cuts and central bank buying.
The market is digesting multiple signals. While a conditional US-Iran ceasefire has diminished the immediate geopolitical risk premium, higher-than-expected US inflation data has kept traders on edge ahead of the Federal Reserve's meeting later this week. For gold, the price defended the lower blue descending channel at roughly $4,550, with a volume cluster showing a support zone between $4,550 and $4,561. The price, however, remains below the 50-period moving average at $4,566.
A confirmed ceasefire could lead to sustained lower oil prices, which would be bullish for the broader market but could cap gold's gains if risk appetite increases significantly. For now, gold holds above the 0.236 Fib support level, with the Relative Strength Index (RSI) climbing from 48, showing mild positive divergence. Resistance lies near $4,590.
Silver demonstrated a more bullish breakout, rallying to $77.78 after clearing key technical levels. The price pushed above both the red 50-period moving average at $76.50 and a descending resistance trendline. A bullish engulfing pattern has cleared the $77.00 pivot, establishing a clear higher-high and higher-low sequence.
The white metal is benefiting from a combination of factors that offset the reduction in safe-haven demand. These include continued global supply deficits and robust industrial demand from the solar, electric vehicle, and artificial intelligence sectors. A volume cluster at $76.50 is now acting as a dynamic floor, with the next major resistance zone between $78.81 and $79.00.
This article is for informational purposes only and does not constitute investment advice.
