Gold and silver have upside scope, but Iran and Fed concerns will keep metals markets 'nervy' as prices test key levels – StoneX

O'Connell noted in her Wednesday update that gold and silver markets have been preoccupied with developments in the Strait of Hormuz in recent weeks. “Silver has generally been following gold although as usual price activity has been much more volatile, most notably at the end of last week when silver surged by 5% on the announcement, subsequently revoked, that the Strait of Hormuz was fully open and would remain so for the rest of the period of ceasefire. The strait is now closed again in what is believed to be a response to the continued blockade put up by the United States.”

She said that while talks are ongoing, “the two sides are still pretty far apart,” so she expects gold and silver “to remain cautious and volatile” for the time being.

“Professional trading houses remain reluctant to commit large positions in the face of such febrile geopolitical conditions and exchange-traded funds have been shedding metal over the past few days, while shorter-term speculators are on both sides of the markets,” she added.

COMEX outright managed money long positions in gold fell in the last week of March but have been regaining ground since, O'Connell noted, although they remain 15t below the 3,190t seen on March 17. “Shorts have also increased but to a lesser extent, meaning that the net long position has been trading narrowly and centered between 280 and 310 tonnes,” she wrote. “Silver positions topped out in the final week of March and drifted lower until mid-April, but have subsequently regained some traction on the back of bargain hunting. Shorts have been covering but not to the same extent as earlier long liquidation, which means that the net long has been declining very gradually to stand most recently at 1,830t, substantially lower than the 12-month average of 4,126t.”

“[I]n both cases the speculative overhang has been eroded, which potentially leaves some upside scope for both metals.”

O'Connell said political developments in the United States are also adding uncertainty to the precious metals market.

“Republican Senator Thomas Tillis, who is on the Senate Banking Committee, is continuing to put a block on the swearing-in of Kevin Warsh as the Fed’s Chairman when Jay Powell's term of office finishes on the 15th of May; he is refusing to lift that block until the end of, or dropping of, the Department of Justice’s probes into the cost overruns in the renovation of the Fed buildings, along with President Trump's associated claim that Jay Powell has been deceiving Congress,” she said. “The President has said that should Jay Powell continue in office after the 15th of May (for which there is apparently a justification under the Federal Reserve Act), he will fire him.”

“Informed opinion is of the view that this is not possible, but we will have to wait and see what transpires in three weeks’ time. This will keep the precious metals markets nervy,” she warned.

O'Connell added that while “[i]t may seem counterintuitive that gold has risen in price when geopolitical tensions appear to have eased, and vice versa,” she believes gold prices are being driven primarily by the dollar and treasury yields. “These have been coming off when the news has been good and this has fed into bullish activity in the gold market, largely from a speculative bias,” she said.

StoneX market analyst Razan Hilal also sounded a cautious note on Wednesday, warning that gold and silver markets are entering a technically fragile phase with price action consolidating near critical breakout levels.

“Recent rebounds have failed to restore strong bullish momentum, leaving both metals vulnerable to directional shifts,” Hilal said. “The current setup reflects a broader tension between recovery attempts and underlying structural weakness. This creates a high-stakes environment where technical confirmation is likely to dictate the next major move.”

She noted that gold prices are consolidating below key resistance levels – mirroring breakdown patterns from earlier in 2026– and said that gold’s inability to reclaim the $4,880 level increases the probability of renewed downside pressure if support begins to weaken, suggesting that gold remains vulnerable to further declines unless a clear breakout confirms a momentum shift.

Meanwhile, silver prices are channel trading within a continuation pattern, which increased the chances of a sharp directional move. Hilal said that a break below the lower boundary near $75 could trigger accelerated losses as silver prices decline to test lower support levels.