Gold, Silver Surge as Oil Slump Triggers Macro Repricing

• Gold and silver surged as oil tumbled on US-Iran peace hopes
• Both metals continue to trade more like risk assets than havens
• Correlations with yields, the dollar and equities remain extremely strong
• Gold breaks April downtrend, silver surge stalls at familiar level

Gulf Headlines Continue to Drive Markets

Gold and silver surged on Wednesday as reports emerged that the US and Iran may be edging closer to a peace deal, strengthening their newfound reputation as highly volatile risk assets rather than traditional geopolitical hedges.

That may sound counterintuitive given easing tensions in the Gulf helped send oil prices tumbling and boosted broader risk appetite, but it fits perfectly with how these metals have traded for months. Like so many other markets lately, they remain beholden to sentiment towards what’s happening in the Gulf, moving in lockstep with stocks while retaining ridiculously strong inverse relationships with bond yields, the US dollar and volatility measures, all of which remain heavily influenced by fluctuations in crude oil prices.

The New Precious Metals Playbook

The correlation matrix below tells the story. Over short-term horizons, gold and silver have traded almost perfectly inversely to US Treasury yields, the dollar and volatility gauges while maintaining strong positive relationships with global equities and S&P 500 futures. Silver, in particular, increasingly resembles a leveraged play on swings in broader risk appetite rather than a traditional defensive asset. The bracketed figure shows the change in the relationship over the past week.

Source: TradingView

That helps explain Wednesday’s move. Reports that Washington and Tehran may be nearing a framework agreement sparked a sharp reversal lower in crude oil prices, dragging volatility and the dollar down with it while helping to support equities and lower bond yields. Gold and silver simply followed the broader macro impulse.

Whether Tehran accepts, rejects or attempts to renegotiate the framework will likely remain the key catalyst for precious metals in the sessions ahead.

Importantly, despite the wild swings in sentiment, both metals continue to respect known levels and chart structures remarkably well, providing traders with a workable playbook to assess directional risks as headlines around the proposed Iran-US memorandum evolve.

Gold Clears April Downtrend

Source: TradingView

Gold delivered a bullish breakout on the back of the latest headlines, pushing above not only the April 17 downtrend but also $4650, a level that had acted as support previously before flipping to resistance earlier this month. While hardly a major level given it’s only been tested once from either direction, it’s on my radar should we see some form of minor retracement on Thursday.

As things stand, the price sits between known levels, making immediate entry not overly appealing. Yes, you could chase the breakout and run a stop behind for protection, but the price has already moved a long way on something we’ve seen numerous times before: hopes for a peace deal.

As such, if we see a pullback towards $4650 that’s not accompanied by any major deterioration in risk appetite, it would make an attractive entry point for longs, allowing positions to be set with a tight stop below for protection. Possible upside targets include the confluence of the 50 and 100-day moving averages from $4775 and, beyond that moving average cluster, $4850 which capped breakout attempts on several occasions last month.

Right now, the message from RSI (14) and MACD is neutral, although the recent trend has been an unwind in downside pressure. The overall message is one that favours patience, taking cues from price action when the risk-reward shifts enough to justify trade entry.

Silver Breakout Faces First Major Hurdle

Source: TradingView

Silver’s breakout preceded that of gold, with the price pushing above the minor downtrend it had been in since late last week before a period of consolidation ahead of Wednesday’s monster move which has seen it test a zone comprising of the 50-day moving average and $78 resistance.

Those two levels, sitting within 40 cents of one another, are the ones to watch immediately overhead, providing a zone where setups can be built around depending on how the near-term price action evolves.

Like gold, the message from the oscillators is neutral at this point, with RSI (14) and MACD sitting at levels that show little evidence momentum is with either the bulls or bears. As such, let the interaction at the resistance zone above guide on how to proceed.

If we see the bullish move extend above $78, longs could be set on the break with a tight stop beneath for protection, targeting initially the 100-day moving average and, beyond that, the April 17 swing high of $83. The merits of that setup would improve if we were to see a retest and bounce from $78 prior to entry, so keep an eye on shorter timeframes should a break occur.

Alternatively, if silver can’t break above the resistance zone, another option would be to set shorts with a stop above $78 for protection, targeting initially the April 29 low around $70.85 with the August 2025 uptrend the next level after that, located today just beneath $70.

Prior to Wednesday’s bullish move, silver had been finding sellers above $76, so keep that level on the radar if considering entering shorts. If the move works initially before stalling beneath the level, consider whether to hold or cut in search of better setups elsewhere.