(Kitco News) - Gold and silver continue to test key support levels within their broader consolidation patterns as analysts note that renewed U.S. dollar momentum is keeping the precious metals rally in check in the near term.
Spot gold is starting the new trading day in familiar territory, trading around $5,000 an ounce, while spot silver is bouncing between $80 and $81 an ounce. The precious metals continue to struggle to attract new bullish momentum, even as ongoing chaos in the Middle East further stokes geopolitical uncertainty and supply chain issues weigh on global growth.
Analysts note that gold and silver continue to struggle as the U.S.-Israel war against Iran supports the U.S. dollar, driven by global financial market liquidity fears. Although the U.S. dollar index has been unable to hold above 100 points, it is not seeing much selling pressure and is currently trading at 99.17.
Faced with growing headwinds, David Morrison, Senior Market Analyst at Trade Nation, said that momentum indicators show gold and silver have no clear direction.
“The daily MACD isn’t particularly supportive of higher prices, as it currently slopes downward, albeit shallowly. Gold has lost its ‘flight to safety’ appeal. And it looks unlikely to capitalise on any further chaos, as that role appears to have been snapped up by the U.S. dollar,” he said.
At the same time, elevated oil prices – with West Texas Intermediate (WTI) crude trading above $95 a barrel – continue to drive inflation fears, which are keeping 10-year yields above 4%. The new inflation threat presents another headwind for gold, as it could force the Federal Reserve— which kicks off its two-day monetary policy meeting today—to maintain its neutral monetary policy stance longer than expected.
Markets have already started to pare back their rate-cut expectations for the second half of 2026.
“By the end of last week, Fed funds futures were no longer pricing in even a 25-basis-point rate cut by the end of the year. This means that almost 50 basis points of expected rate cuts have been priced out of the market since the start of the war,” said Carsten Fritsch, Commodity Analyst at Commerzbank, in a note Tuesday. “Against this backdrop, ETF investors have been pulling out money. Over the past two weeks, holdings in the gold ETFs tracked by Bloomberg have fallen by 37 tons, effectively reversing all inflows since mid-January. It will now be interesting to see what interest rate outlook the Fed provides following the FOMC meeting tomorrow. If the door remains open for interest rate cuts, the gold price could rise again. However, the considerable uncertainty surrounding the duration of the war and the disruption to oil supplies is likely to make the Fed cautious about making too clear a statement on the future interest rate path.”
Although gold and silver continue to face short-term selling pressure, analysts are not ready to give up on the precious metals just yet.
Some analysts have said that gold and silver could attract renewed safe-haven demand if the war in Iran becomes a prolonged conflict.
Commodity analysts at Société Générale said that gold looks deceptively well-behaved.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, said in a social media post that gold continues to hold above its 50-day moving average, even if it looks vulnerable to further weakness.
“The long-term case for holding hard assets remains intact; however, rising inflation concerns—lifting long-end yields and supporting a stronger dollar—have created short-term headwinds, encouraging profit-taking following an extended period of strong gains,” he said.
