Gold and Silver Analysis: Geopolitical Risks and Weak Dollar Drive Bullish Momentum

Gold (XAU) price turns up from the support of $5,090 and nears $5,200 in Asian trading. This positive momentum is fuelled by the safe haven demand which is also strong due to the geopolitical risks ahead of US-Iran nuclear talks. The military build-up in the Middle East keeps investors nervous. This uncertainty is a favour for gold as traders seek protection from sudden shocks. The negative price action in the US dollar index also supports the gold recovery.

Silver (XAG) tends to follow gold in risk off periods. Increasing geopolitical tension leads to the demand for both metals. Investors tend to use silver as a second safe-haven when gold rallies. As fears increase, flows into the portfolio of precious metals increase. This dynamic develops upward pressure on silver prices.

Therefore, Fed policy is a key headwind, but its impact appears to be limited now. Officials signal no hurry to cut rates because of sticky inflation. The increased interest rates tend to weigh on gold and silver. Nevertheless, trade policy risks and global growth concerns regarding expansion in markets remain. Trade tensions provide another layer of positive action for precious metals. New tariffs and threat of higher duties increase fears of supply chain disruption. These policies can slow growth and increase volatility.

Gold Technical Analysis – Break Above $5,090 Keeps Bullish Structure Intact

The daily chart for spot gold shows strong bullish price action as the price broke above $5,090. After the breakout, the price surged to $5,250 and then corrected back towards the $5,090.

The recent rebound from the support of $5,090 during Asian trading hours indicates positive price action. A break above $5,250 will indicate continued upside towards $5,600. However, a move below $5,090 will indicate further downside towards $5,000. As long as $4,400 support holds, the next move in gold will likely be higher.

The short-term price action for spot gold also remains strongly bullish, as the price consolidation of $4,770 and $5,100 was broken. The retracement back towards the breakout and then the rebound during the Asian hours indicate continued upside momentum. The ongoing geopolitical crisis and market uncertainty keep the bullish tone in the market. Therefore, the price is likely to continue higher.

Silver Technical Analysis – Momentum Builds Above $72, Eyes $100

The silver price also shows strong bullish momentum after the rebound from $72, which is acting as a minor support. The price is now challenging $90, and a break above this level will indicate further upside towards $100. The emergence of bullish hammer candles above $64, which is termed the major support region, indicates continued upside in the silver market.

The 4-hour chart for spot silver shows the formation of ascending broadening wedge pattern, whereby the price has formed a support level above the $70 area. The strong rebound from $70 indicates continued upside momentum. A short-term breakout above $90 indicates continued upside towards $120.

US Dollar Index Analysis – Weak Structure Supports Precious Metals

The positive price action in gold and silver prices is observed due to weakness in the US dollar index. The chart below shows that the US dollar index is trading below 50-day SMA, which indicates continued downside momentum.

The 50-day SMA is below the 200-day SMA, which highlights the negative trend.
However, the long-term consolidation between 96.50 and 100.50 is going to end soon. A break below 96 will indicate further downside towards 90. However, a strong recovery above 98.50 will take the index towards 100.50.

These consolidations are also observed on the 4-hour chart, whereby the index is consolidating below the 98 level. The formation of a double top at 100.50 and then breakdown below 98 indicates the negative trend.

Conclusion

Gold and silver are supported as geopolitical risks, tariff uncertainty and a weak US dollar continue to drive safe-haven demand. Gold holds above key support near $5,090 and the bullish structure remains intact with a move above $5,250 opening the path towards higher levels.

Silver is following the same tone as strength above $72 and pressure near $90 is indicating continued upside momentum. Fed policy remains a headwind, but there are no changes to the bigger picture with growth risks and trade tensions remaining. As long as the dollar index is weak and key supports for both metals hold, the overall bias for gold and silver is to the upside.

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