Gold & Silver Prices Soar, Oil Markets Shaken by Middle East Conflict, GBPUSD Fluctuates on UK Inflation Data

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Several key factors are currently shaping these market movements. Geopolitical tensions, particularly the evolving conflict in the Middle East, remain a significant source of uncertainty, especially for oil prices. Any further escalation could have far-reaching consequences for global markets. Central bank policies also play a crucial role, with the Federal Reserve’s interest rate trajectory and the gold-buying activities of global central banks having a direct impact on both gold and the US dollar. Inflation remains a concern, with investors seeking safe havens like gold to protect themselves against rising prices. UK inflation data is a key metric for the GBPUSD pair, influencing market expectations about future Bank of England decisions.

Gold:

Precious metals, namely gold and silver, are currently experiencing a significant upswing in prices. Gold’s remarkable surge is attributed to several factors, including substantial purchases by global central banks (particularly China), increased demand from Chinese consumers seeking shelter from economic risks, its role as a hedge against persistent inflation, and the anticipation of potential US interest rate cuts. Silver, often mirroring gold’s movements, is also benefiting from its value as a safe-haven asset as well as its growing industrial applications.

Technical indicators for gold and silver suggest that the upward momentum for both precious metals could continue in the near term. The gold price has been hovering around the upper limits of its bullish channel around 3,276 and remains in an overbought condition, even though the RSI oscillator recently dropped below 70 points momentarily, showing there is significant momentum for the price.

Oil:

Oil markets, on the other hand, have witnessed considerable volatility in the wake of escalating tensions in the Middle East. Iranian attacks on Israel initially triggered a sharp rise in oil prices, fueled by concerns about potential disruptions to regional oil supplies. However, prices have since moderated as the impact of the attacks proved to be limited. Market participants are now closely monitoring the situation, with focus on Israel’s potential response and the broader implications for the stability of the Middle East and its oil exports.

Oil prices are likely to remain volatile, with the potential for further increases if Middle East tensions worsen. Traders are keeping a close eye on key support and resistance levels to gauge oil’s potential trajectory. Oil is now trading below $90, breaking the $87.61 support. The price has almost lost 4% at Thursday’s closing and is in line to test its next significant support at $85.

GBPUSD:

The British pound (GBPUSD) initially responded positively to the latest UK inflation data, which indicated a slight easing of price pressures in March. However, the pound’s gains were tempered by the overall strength of the US dollar, driven by robust US economic data and expectations of a more aggressive stance from the Federal Reserve on interest rates.

While the GBPUSD pair might experience a short-term correction or reversal based on technical indicators, the broader outlook hinges on the interplay between central bank policies and economic fundamentals. The pound is now trading close to $1.2395 weekly support, reaching its lowest price since early November 2023. So far, the pound has lost 1.41% during the month and might remain unchanged compared to the beginning of the week.