Market update: gold recovers amid Middle East tensions; silver faces continued sell-offs

Gold and silver's response to Middle East tensions

Gold prices have seen a partial recovery from recent losses as escalating tensions between Iran and Israel spark fears of broader conflict, driving investors towards safe-haven assets. Meanwhile, silver struggles under the weight of sustained sell-offs, despite potential technical support.

Gold's price movements

Gold continues to oscillate within a defined range over several months, testing and momentarily surpassing resistance before retracting.

The short-term outlook remains mixed, with the 50-day simple moving avereage (SMA) providing support and the 20-day SMA serving as near-term resistance. While the trend of higher lows continues, a break above $2485/oz is essential to maintain upward momentum.

Gold daily price chart

Retail trader data indicates that 57.69% of traders are net-long, with a long-to-short ratio at 1.36 to 1. This is an increase of 7.05% in net-long positions from yesterday, although there is a 5.31% decrease from last week. Conversely, net-short positions have dropped by 9.89% since yesterday and 13.35% from last week.

Our contrarian view suggests that the current heavy net-long sentiment might lead to further price declines for gold. The recent increase in net-long positions reinforces a bearish outlook.

Gold client positioning chart

Silver's underperformance

Silver continues to underperform gold, with repeated sharp sell-offs since mid-May applying pressure. The metal is currently below both the 20- and 50-day SMAs, approaching the 200-day SMA which could offer some support. A potential bullish flag formation appears to be holding against recent sell-offs.

Silver daily price chart

Data shows that 89.79% of traders are net-long silver, with the ratio of traders long to short at 8.79 to 1. There's been a 2.05% decrease in net-long positions since yesterday and an 8.17% decrease from last week. The number of traders net-short has decreased by 21.15% since yesterday and 25.10% from last week.

With traders predominantly net-long, the likelihood of continued downward pressure on silver prices is supported by the current sentiment and recent trading patterns.

Silver client positioning chart

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