On Friday, both silver and gold prices experienced significant rallies following the reopening of the Strait of Hormuz and positive developments in US-Iran relations, which led to a sharp decline in the US Dollar and energy prices. Silver (XAG/USD) surged over 4%, reclaiming the $81.00 level and trading at $81.82, after reaching a five-week high of $83.05 before retreating. This marks the fourth consecutive week of gains for silver, with technical momentum turning bullish as the Relative Strength Index (RSI) cleared a previous peak. Key resistance levels for silver are identified at $85.44 (March 13 high), $87.43 (March 12 high), and $89.42 (March 11 peak), with the $90.00 milestone as a potential short-term target. On the downside, support is seen at $77.65-$77.85, with further support at the 100-day SMA ($77.24) and 20-day SMA ($73.77) [1].
Gold (XAU/USD) also rallied, breaking past $4,850 and rising more than 1.50% as the US-Iran conflict appeared to de-escalate. The Iranian Foreign Minister announced the Strait of Hormuz was open to all commercial vessels during a 10-day truce between Israel and Lebanon, which was echoed by a post from former US President Trump. However, a senior Iranian official cautioned that significant differences remain between Tehran and Washington, and the Strait's openness depends on the terms of an Iran-US ceasefire. The news led to a sharp drop in energy prices, with WTI crude oil falling over 9.50% to $81.74 per barrel, and the US Dollar Index (DXY) dropping to a seven-week low at 98.01, down 0.17%. The US 10-year Treasury yield also fell to its lowest level since mid-March, down 7 basis points to 4.246% [2].
Market participants responded to the falling oil prices by pricing in 14 basis points of Federal Reserve easing towards the end of the year, according to LSEG Workspace data. Federal Reserve officials offered mixed signals: Governor Christopher Waller indicated a preference for holding rates steady if inflation remains high and the labor market weak, while San Francisco Fed President Mary Daly described policy as 'slightly restrictive' and suggested she could leave rates steady, but would support a hike if inflation rises or consider cuts if the Iran war ends quickly [2].
Technically, gold faces resistance at $4,900 (50-day SMA) and $4,950, with momentum remaining positive as the RSI clears recent peaks. For further upside, gold must decisively clear these resistance levels. Silver's constructive price action and bullish momentum suggest potential for further gains if it closes above $81.00 [1][2].
CONCLUSION
The reopening of the Strait of Hormuz and easing US-Iran tensions have triggered strong rallies in both silver and gold, driven by a weaker US Dollar and plunging energy prices. Market sentiment is bullish for precious metals, with technical indicators supporting further upside if key resistance levels are breached. The market is also anticipating potential Federal Reserve easing, contingent on further geopolitical developments.