Gold and Silver Analysis: Momentum Builds as Fed Shifts and Geopolitical Tensions Drive Demand

Gold (XAU) extended its rally to a fresh record above $4,520 during Asian trading on Wednesday. The surge reflects growing demand for safe havens amid rising tensions between the U.S. and Venezuela. Venezuela’s move to criminalise certain trade disruptions, following U.S. oil-related sanctions, has amplified geopolitical stress. As fear and uncertainty increase, investors continue to shift their capital into gold to preserve their wealth.

On the other hand, silver (XAG) also benefits from the same drivers, with industrial and investment demand pushing it higher in tandem with gold. The weakening U.S. dollar, driven by narrowing rate spreads and expectations of Fed policy changes, further supports silver. While gold serves as a monetary hedge, silver gains strength as both a safe haven and an industrial asset. Any short-term dip in either metal may serve as a new entry point for long-term buyers.

Fed Policy Shifts and Fiscal Risks Support Precious Metals

Market expectations for multiple Fed rate cuts in 2026 remain a strong catalyst. Despite strong GDP growth at 4.3%, consumer confidence continues to decline. Moreover, a dovish shift in leadership under Trump’s potential Fed pick fuels further speculation.

On the other hand, Trump’s comments about demanding lower rates from the next Fed chair have added to investor concerns over the central bank’s independence, which in turn boosts the appeal of gold.

Despite the strong GDP data, the US economy faces headwinds from the unemployment conditions. Therefore, the long-term risks remain elevated. Rising fiscal debt, tight repo markets, and surging sovereign yields signal stress in the financial system. With both gold and silver in a strong uptrend, the broader outlook remains bullish, driven by policy uncertainty, debt concerns, and a weakening currency backdrop.

Gold Technical Analysis

The daily chart for spot gold shows that the price has broken above the $4,380 level and surged to a new record high above $4,500. The price remains in strong upward momentum, and any pullback toward the $4,380 level should be viewed as a solid buying opportunity for the next leg higher. The emergence of an ascending broadening wedge pattern indicates strong volatility. On the other hand, the breakout from the ascending triangle highlights upside momentum.

The 4-hour chart also confirms strong bullish momentum in the gold market. The price broke above the ascending triangle at $4,380 after forming a cup pattern, indicating continued upside potential.

Silver Technical Analysis

The daily chart for spot silver shows that the price broke out after a strong bullish formation at the $54.50 level and continues to move higher. The price continues to surge despite overbought conditions. Any correction in the silver market offers a strong buying opportunity for investors.

The cup and handle formation in the silver market is clearly observed on the 4-hour chart, showing that the price broke out after completing this pattern. This bullish formation is a key technical reason behind the recent surge in silver. It suggests that the market is likely to continue moving higher in the coming days.

However, overbought conditions may lead to a short-term correction. Any such pullback should be viewed as a strong buying opportunity for investors.