Metals such as silver and gold peaked to fresh highs on Friday, but both returned to more temperated prices amid profit-taking. However, the bullish sentiment is tangible in the market.
Factors that are contributing to metals upside are geopolitical tensions in the middle east with Iran and the United States crossing declarations, Also, the US capturing of the Iranian Grace 1 oil tanker in Gibraltar, Mediterranean sea, by the US and UK.
Additionally, talks of a rate cut by the Fed are pushing the dollar index under pressure.
As per context, dollar index is trading positive on Friday after logging two negative sessions which drove the unit from 97.45 on Wednesday to 96.65 on Thursday. Today, DXY is 0.50% positive at 97.17. On the week, DXY remains positive but inside a small range between 96.65 and 97.45.
Gold down after peaking at 1,450, 6-year high
Gold is trading negative on Friday as investors are booking profits ahead of the weekend and following a jump in prices to 1,450. Geopolitical tensions, trade war, and speculations for a rate cut by the Fed are the catalyst.
On Thursday, XAU/USD posted a significant advance from the 1,420 area to break above the 1,440 resistance that contained the pair for almost one month. On Friday, gold extended gains to trade as high as 1,453, its highest level since May 2013; however, the unit was unable to maintain prices, and it is now back below 1,440.
After reaching 6-year highs at 1,453, investors started to book profits on a typical Friday session ahead of the weekend. Bullion is now trading 0.60% negative on the day at 1,437.
Gold is testing back the now support at 1,440. A close above that level would open the doors for an extended run during the next week, fueled by more speculations on rate cuts.
To the upside, the immediate resistance is, obviously, the 1,450 area; Above there, 1,480 and the psychological level of 1,500 are the frontiers before 1,530, a critical level to watch.
To the downside, if gold returns below 1,440, it will find supports at 1,420, 1,400 and 1,380. Overall, XAU/USD would be getting back into the previous range it has been trading in the last month.
On the week, gold is ready to close its second positive week in a row as the whole week has been influenced by rate cut speculations that are affecting the dollar index. It would be the seventh positive close in the last nine sessions.
Silver extends gains to 16.45, fresh 1-year high
Silver doesn’t care about profit-taking on Friday, and it is trading positive for the sixth positive day in a row. On Friday, XAG/USD extended gains to 16.45, its highest level since June 2018.
Investors are looking for the metal as an excellent asset to put their money besides gold. Six days of gains are a testimony of that. However, the metal is returning to levels around 16.35, where it could turn negative in the day.
If the unit keeps its retracement, it will find supports at 16.20 and 16.00. To the upside, 16.50 is the natural resistance now. Above there, check for the 16.80 and 17.30 as the frontiers.
On the weekly chart, XAG/USD just exploded the current week as it is ready to close its best week in 3 years with a potential gain of 7.25%. The period left a significant technical break event at 16.20.
This article was originally posted on FX Empire
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