Market update: gold recovers amid Middle East tensions; silver faces continued sell-offs
As geopolitical tensions escalate, gold prices show signs of recovery, while silver remains under pressure despite potential technical support levels.
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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