Gold and Silver Consolidate After US Jobless Claims Data and Easing Iran Tensions

Gold (XAUUSD) prices dropped slightly to $4,600 in Asian trading on Friday, after stronger than expected US jobless claims data. The chart below shows that initial jobless claims in the U.S. dropped 9,000 from the previous week to 198,000 for the week ending January 10th. Meanwhile, continuing claims declined by 19,000 to 1,884,000 at the turn of the year, as expected by the market. This data caused the U.S. dollar to rebound higher which put short-term pressure on gold and silver (XAGUSD) prices.

In addition, the easing of geopolitical tensions between Iran and the U.S. has decreased the safe-haven demand. President Trump said that there are no plans for executions from Iran, which calmed fears slightly, but the situation remains tense. Therefore, the correction in the gold market may be a better entry point for traders ahead of the next move.

Gold Technical Analysis

Gold price consolidates above $4,600 in a tight range after rebounding off the $4,260 support area. This consolidation suggests that gold could consolidate back towards the $4,550 level or lower before the next move higher.

Overall, the price is very bullish, and this correction is likely to be a great buying opportunity for short-term traders. However, a break below $4,260 would signal deeper correction to $4,000.

The immediate support for spot gold is the $4,500 to $4,550 level as shown in the 4-hour chart below. A break below $4,500 could take the price towards the $4,260 area.

The breakout from the triangle pattern followed by the formation of an inverted head and shoulders pattern above $4,260 is bullish price action. Therefore, this correction may provide a short term buying opportunity for the trader.

Silver Technical Analysis

The risk in the silver market is on the rise as the price of silver has reached a significant key resistance, as marked by the ascending broadening wedge pattern. Silver is correcting from $90-$100, which is considered as a strong resistance zone. A break above the $100 level will bring some more upside in the silver market.

However, a correction towards the $60 to $70 area would provide a good buying opportunity for the next big surge in silver.

The short-term price action for silver also shows strong resistance at the ascending broadening wedge pattern which suggests a correction before the next move higher. The immediate support on the 4-hour chart is still at the $84 area.

US Dollar Technical Analysis

The daily chart of the USD Index shows that the index is breaking above the 50-day SMA. The 50-day SMA has crossed above the 200-day SMA. However, the overall price action is neutral and looks for next move.

A break below 97.50 will indicate a further drop to the 96.50 area and a break above 100.50 will induce more upside to the 102 level.

The 4-hour chart for the US Dollar Index shows that the index is consolidating between the 96.50 and the 100.50 level and waiting for the next direction. The rebound from the 97.50 level was because of the escalation of the geopolitical crisis. However, the index is neutral as it is consolidating in this range. A breakout from this range is required to make the next move in US dollar index.

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