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There seems to be a positive breakthrough in the Iran war. On the night of Tuesday to Wednesday, Iran and the United States announced a two-week truce on. Furthermore shared the White House that the military goals have been achieved, that there are very good talks, and that Iran has come up with a very reasonable peace proposal.
The market reacted immediately. We saw the oil price fall by 15 percent, stocks rise and also the gold price and silver price climb up considerably.
A two-week ceasefire may not sound like a definitive end to the conflict. However, the White House seems to be anticipating this by now.
“We received a ten-point proposal and believe it provides a workable basis for negotiations,” said a statement from Donald Trump shared by the White House. That two-week ceasefire would mainly serve to put the final touches on the proverbial i.
So for now, there is much evidence that the Iran war is moving towards an end after almost six weeks.
The market's first reaction is logically in favor of gold and silver. In the US government bond market, we see interest rates falling sharply. This is because the end of the conflict means that inflation expectations fall, after all, the oil price is falling sharply, and the US central bank gets room for interest rate cuts; or at least no longer has to think about interest rate hikes.
This creates an interesting field of tension for gold and silver. Less threat of war usually removes some shine from safe havens. At the same time, a weaker dollar and lower interest rates are precisely factors that support precious metals. For now, the latter seems to weigh more heavily.
Especially because gold and silver were under considerable pressure during the conflict. Now the war seems to be coming to an end, and precious metals are taking back some of their market value.
First, it's important to note that the gold price recently received support from its 200-day price average (blue). That seems to be an important support point when it comes to price declines. Nevertheless, the price is still quite a long way from resuming the upward trend.
To achieve this, it would be a good development if gold on its daily chart once again achieved a so-called “bullishness formation” for the range of exponential price averages.
A bull formation occurs when the price rises as you move to a shorter average. The rate of the 100-day exponential average must therefore be higher than the 200-day variant, and so on.
This would happen again if the 21-day variant (yellow) climbs above the 55-day variant (blue).
From a technical perspective, this is therefore an interesting phase for the gold price. In theory, there is a solid basis for a new period of price increases.
After the extreme increases that we saw towards the end of January, gold and silver have now both cooled considerably and a bottom process seems to be underway. From here, a foundation must now be built on which a new phase of increases can begin.
From a fundamental perspective, there remains a favourable situation for gold and silver. Although the Iran war is over, we are still in a world where there is a relatively high level of geopolitical tension.
In Europe, for example, there is a perception that the United States is no longer the ally of the past. From that realization, plans have already emerged to make substantial defense investments.
Those investments cannot only be paid for by withdrawing money elsewhere. To do so, you will probably also have to incur additional debts. In other words, the current geopolitical tensions are causing a higher degree of inefficiency.
As a result, countries are more likely to go to the money press, which is usually beneficial for gold and silver. From a fundamental perspective, there is therefore still a situation where investing in gold and investing in silver is very justifiable.
In addition, silver plays an important role in the AI revolution. There is likely to be a lot of extra demand from there in the coming years.
Gold and silver are making a powerful comeback after the ceasefire in Iran, supported by falling interest rates and a weaker dollar. Discover why this combination offers opportunities for precious metals right now, despite declining geopolitical tensions.
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