During the European trading session on Friday (March 13), gold (XAU/USD) maintained a robust upward trend, trading near the $5,120 range with strong buying support and relatively high market sentiment for long positions. However, it is important to note that this bullish trend in gold prices was not driven by a single factor but primarily supported by the ongoing escalation of geopolitical tensions in the Middle East and global investors' urgent demand for safe-haven assets, both of which jointly propelled the steady rise in gold prices.
On the other hand, the continued strengthening of the US Dollar Index became a key constraint limiting the rise in gold prices. Recently, expectations of interest rate cuts by the Federal Reserve (Fed) have significantly cooled, with investors widely believing that the Fed may maintain the current high-interest-rate level for a longer period. This expectation has pushed up the US Dollar Index, thereby pressuring gold prices denominated in US dollars and preventing a more substantial increase in gold prices.
Geopolitical Tensions Drive Safe-Haven Demand
As mentioned earlier, the recent upward momentum in gold prices has mainly been driven by worsening geopolitical conditions. Iran's new Supreme Leader, Mojtaba Khamenei, issued his first public warning since taking office, strongly stating that all US military bases in the region must be immediately shut down or face decisive attacks from Iran; he also emphasized that even as Iran seeks to maintain friendly relations with neighboring countries, its attacks on US military bases will continue without interruption due to diplomatic considerations.
Meanwhile, President Trump made relevant statements, explicitly emphasizing that preventing Iran’s expansion is more important than maintaining global oil price stability. This statement further escalated tensions in the Middle East, compounded by joint military operations conducted by the United States and Israel within Iran, directly driving a sharp spike in international crude oil prices and causing turbulence in the global energy market.
The market generally fears that if geopolitical conflicts escalate further, the Strait of Hormuz might be closed. As a critical global oil transportation route, its closure would directly result in a disruption of global oil supply, leading to a significant rise in global inflation levels. Based on these concerns, investors currently expect that the Federal Reserve will substantially reduce interest rate cuts in 2026, and it is even possible that the Fed will maintain the current high-interest-rate level until the end of the year.
Traders Focus on US Inflation Data, a Key Factor for Gold and Dollar Movements
Looking ahead, global traders are closely monitoring the upcoming release of the US Personal Consumption Expenditures (PCE) Price Index, which is considered a core reference indicator for the Federal Reserve in formulating monetary policy and will be a decisive factor in the short-term movements of gold and the dollar.
Specifically, if the PCE inflation data exceeds market expectations, it indicates that US inflationary pressures remain unresolved, and the market will further reinforce expectations of the Fed maintaining high interest rates. This will drive the US Dollar Index higher, exerting additional pressure on gold prices and restricting their upside potential. However, if the inflation data shows slower growth or signs of a pullback compared to expectations, investor expectations for Fed interest rate cuts will resurface, potentially leading to a pullback in the US Dollar Index. Investors are likely to turn back to gold as a traditional safe-haven asset, driving gold prices to resume their upward trajectory.
Gold Technical Analysis: Can It Hold Above $5,040?
(Spot Gold 4-Hour Chart Source: Easy Forex)
From a technical perspective, on the 4-hour chart, the gold price is currently approaching the $5,086 level. Following a sharp surge driven by concentrated bursts of geopolitical supply risks, it is currently in a brief consolidation phase. The gold price remains firmly above the key support level of $5,040, and the 200-period moving average shows a clear upward trend. This technical signal indicates that the overall bullish trend for gold remains intact, with the long-term upward structure unbroken.
However, caution is warranted as the trendline near $5,200 continues to pose strong upward resistance, repeatedly blocking the rise of the gold price and becoming the main obstacle for its current breakout. Additionally, the Relative Strength Index (RSI) is currently hovering in the 45-50 range, within the neutral zone. This signal indicates that the upward momentum of gold is clearly weakening, and the tug-of-war between buyers and sellers is gradually reaching equilibrium.
In terms of short-term trends, if the gold price can effectively break through the resistance level at $5,200, the next target will likely point to $5,320. Conversely, if the gold price falls below the critical support level at $5,040, there is a need to be cautious about the possibility of further declines to $4,925, which may lead to a short-term correction phase for gold.
Silver Technical Analysis: Can the $84.40 Level Be Broken?
(Spot silver 4-hour chart Source: Easy Forex)
The silver price is trading near $83.98 during the session. From the 4-hour chart, it is evident that the silver price is currently in a typical triangular consolidation pattern. This formation suggests that silver is in a deadlock between bulls and bears, with the short-term directional trend remaining unclear. The first resistance level above is $84.40, while the critical support levels below are $79.66 and the long-term trendline. These two levels will serve as the core thresholds determining the short-term direction of silver.
In terms of technical indicators, the 50-period moving average has flattened, signaling hesitation in short-term market sentiment, with both buyers and sellers temporarily balanced. However, the 200-period moving average still exhibits an upward trend, providing a positive long-term technical signal that supports the overall uptrend, indicating that the long-term bullish structure remains unchanged.
Moreover, the RSI indicator is currently around 45, at a moderately low neutral level, suggesting that the upward momentum for silver still exists but is continuously weakening. As previously noted, persistently high oil prices continue to support buying demand for silver as an inflation hedge, providing some support for silver prices. However, if market volatility continues to decline and investor sentiment becomes more cautious, the silver price may enter a substantive consolidation phase.
In terms of short-term breakout directions, if silver successfully breaks through the resistance level at $84.40, it could potentially rise further toward the $87-$89 range. Conversely, if it breaks below the support level at $79.60, profit-taking may occur, potentially leading to a significant drop in the silver price, shifting the short-term outlook to bearish.
