Gold and Silver Analysis: XAUUSD Breaks Key Support Amid Dollar Strength and Trade Optimism

The resolution of the US-EU trade dispute has pushed gold (XAUUSD) prices lower. As market fears of increased uncertainty faded, the safe-haven demand for gold dropped. The gold price has fallen by more than $100 after reaching a peak of $3450.

A stronger US Dollar added pressure on gold. As the US Dollar appreciated significantly, it reduced gold’s appeal as an alternative asset. The easing of global trade tensions between the US, EU, Japan, and China further weakened gold’s short-term outlook.

However, uncertainty remains around tariffs and inflation, which leaves room open for Fed rate cuts, which could support the gold prices. If the Fed signals a dovish stance in the upcoming meeting, it may spark a rebound in gold despite the recent drop.

The gold market is waiting for US economic data to determine its next direction. The US GDP data will be released on Wednesday, while Core PCE Price Index and Employment Cost Index data will be released on Thursday. On the other hand, the nonfarm payrolls data on Friday will drive the next move in the gold price.

Gold Technical Analysis

XAUUSD Daily Chart – Breakout of Triangle Pattern

The daily chart for spot gold shows that the price has broken below the ascending triangle and the 50-day SMA. However, the previous trading range extends down to the $3,250 level. A breakout below this support increases price uncertainty.

The repeated failure to break above the $3,450 level for the fourth time has heightened the risk of a decline in the gold market. Meanwhile, ongoing uncertainty in the US Dollar Index, driven by the tariff crisis, continues to fuel volatility and instability in gold prices.

XAUUSD 4-Hour Chart – Consolidation

The 4-hour chart for spot gold shows that the price is consolidating within the orange zone, between the $3,250 and $3,430 area. This range reflects a sideways pattern, and a breakout above or below this zone will determine the next directional move in the gold market. Gold has reached short-term oversold conditions and is beginning to rebound. However, a failure to break above the $3,350 level may cap the upside and trigger another pullback.

Silver Technical Analysis

XAGUSD Daily Chart – Correction from Overbought Region

The daily chart for spot silver shows that the price is forming a strong bullish trend. This upward momentum is supported by the formation of an inverted head and shoulders pattern in 2024, followed by an Adam and Eve pattern in 2025.

The breakout above the $35 level triggered a sharp rally, pushing silver prices toward the $39.50 resistance zone. This bullish structure suggests that the long-term trend remains upward. However, the price is currently correcting from overbought conditions and may find support in the $35 to $37 range.

XAGUSD 4-Hour Chart – Correction

The 4-hour chart for spot silver shows strong bullish price action. The ongoing correction from the $39.50 level is likely to find strong support around the $37 or $36 area. Once this pullback is complete, prices are expected to resume their upward trend. The emergence of strong bullish momentum near the $31.80 and $35 levels suggests continued strength, with the following potential targets in the $40 to $42 range for spot silver.

US Dollar Index Technical Analysis

US Dollar Daily – Rebound

The daily chart for the US Dollar Index shows that the index has broken above the 50-day SMA after multiple attempts over the past few months. This breakout is likely to push the US Dollar Index toward the 100.50 level. However, the index has reached initial resistance around the 99 area and is currently correcting lower from this region.

US Dollar 4-Hour Chart – Rebound

The 4-hour chart for the USD Index shows that the index is consolidating within a sideways range. Immediate resistance lies near the 99.40 level. A break above 99.40 could push the USD Index toward 100.50, and a further breakout above 100.50 may extend the move to the 102.00 level.

However, as long as the index remains below 100.50, the price action is expected to stay bearish. A break below the 96.00 level would likely trigger a decline toward the 90.00 area.