Gold prices, while still high, have fallen by about $100 from overnight highs; silver prices, however, have given back overnight gains, showing a sharp decline. The US dollar index rose strongly today, reaching a five-week high, putting downward pressure on the precious metals sector. Profit-taking by short-term futures traders, coupled with active liquidation of long positions, were prominent features of today's market. Furthermore, the strong risk aversion sentiment that permeated the market overnight and this morning eased somewhat around midday. April gold futures rose $76.90 to $5324.80 during the session; March silver futures fell $5.391 to $87.900.



The US-Israeli air campaign against Iran is escalating, with no end in sight, and Lebanon has also been drawn into the conflict. This latest Israeli military action is a response to Hezbollah attacks. Tehran has launched missiles and drones at Israel, Gulf states, and a British airbase in Cyprus. This continued escalation of geopolitical tensions is a key factor influencing the market. David Megel, head of metals trading at High Ridge Futures, stated, "Currently, the market is trying to determine whether there will be more attacks in the coming weeks, and I think it is this uncertainty that is likely to support prices."

Oil prices surged amid the Middle East conflict, exacerbating inflation concerns, and on Monday, money markets across the board lowered their expectations for interest rate cuts in the US, UK, and Eurozone. In other markets, major Wall Street stock indices fell, while oil and gas prices soared due to geopolitical tensions threatening global trade routes. A Bloomberg report noted, "Swap data linked to the Fed's policy meeting date shows that the probability of three Fed rate cuts in 2026 has fallen from nearly 50% last week to 20%. Traders believe the Bank of England will not complete three rate cuts this year and have lowered the probability of a March rate cut from over 80% to 60%; the probability of a rate cut by the European Central Bank this year has been halved, with the market pricing in a cut of only 5 basis points." The report also stated, "Yields on two-year government bonds in the US, UK, and Germany, which are most sensitive to monetary policy changes, all rose more than long-term bond yields, reflecting a significant increase in inflation indicators."

In other key external markets today, crude oil prices rose sharply, but retreated significantly from overnight highs. Oil prices touched an eight-month high overnight and are currently trading around $70.50 per barrel. The benchmark 10-year US Treasury yield is currently around 4.00%.

The ongoing geopolitical tensions are reshaping global asset allocation patterns. Analysts at SPAngel point out that the increasingly fragmented geopolitical landscape is prompting BRICS central banks to reduce their holdings of dollar-denominated assets and increase their gold reserves, a trend expected to continue. Meanwhile, BNP Paribas also predicts that investment demand for physical gold will be the primary driver of gold prices this year.


(COMEX Gold Daily Chart Source: FX678)

The next upside target for April gold futures bulls is to push the contract closing price above the key resistance level – the all-time high of $5626.80. The short-term downside target for bears is to push futures prices below the key technical support level of $5000.00. The first resistance level for gold futures is the overnight high of $5434.10, with further resistance at $5500.00; the first support level is today's low of $5272.90, with further support at $5200.00.

The next upside target for March silver futures bulls is to push the contract closing price above the key technical resistance level of $100.00. The next downside target for bears is to push the contract closing price below the key support level of $71.815, the February low. The first resistance level for silver futures is $90.00, with further resistance at $92.50; the next support level is $85.00, with further support at $82.50.

Note: Gold pricing is primarily achieved through two mechanisms: the spot market, which is a market for immediate buying and selling and immediate delivery; and the futures market, which determines the gold price at the future delivery date. Influenced by year-end positions and market liquidity, the most actively traded gold futures contract on the Chicago Mercantile Exchange is currently the December contract.