Gold and Silver Hit Record High on Geopolitical Tensions and Safe-Haven Demand

Gold (XAU) price made a new record high at $4,690 on Monday as geopolitical tensions boost safe haven demand. The threat by President Trump of tariffs against eight European countries has increased fears of another trade war. These nations include major economies such as Germany and France. Investors shifted their focus to safe haven assets to hedge against financial instability which drove up the prices of gold and silver (XAG).

The threat of economic fallout in Europe is an additional element of global uncertainty. The EU is planning countermeasures and markets anticipate more friction between the U.S. and its allies. This scenario is bullish for gold, which in the past has historically done well in times of geopolitical flare-ups and policy-driven volatility.

However, better U.S. economic data and late Fed rate cut expectations provide a mixed backdrop. The U.S. Dollar Index is consolidating below the key 100.50 level and this is still a bearish trend. A break below the 96 level in U.S. dollar index could have another wave of buying pressure in the gold and silver markets.

Gold Technical Analysis

The gold market has established a new record level on Monday in the midst of the strong bullish price section. The chart below displays that the price is still trading within the ascending broadening wedge pattern after a breakout from the ascending triangle.

As we see the formation of the ascending broadening wedge pattern, there is good bullish potential in the next few weeks. However the gold market must hold the $4,400 level in order to be bullish.

Any break below $4,300 will bring more downside towards the $4,000 area. However, the gold price is going higher in the direction of $5,000 level in the next few weeks.

The short-term price action for spot gold is also very bullish. The price has formed an inverted head and shoulders pattern above the $4,260 support level. After forming these bullish patterns, the price has also broken above the $4,500 level and marked strong support around this area. As long as the $4,500 support level holds, the next move is still higher.

Silver Technical Analysis

The day chart for spot silver shows that the price is trading at the strong resistance of the ascending broadening wedge. This resistance is highlighted by the red shaded area in the chart. This resistance is in the range of $90 to $100. A break above this price zone will bring more buying pressure in the silver market.

The robust support zone is the $60 to $70 area. As long as the $60 support remains intact, then the next move in the silver market is likely to be higher.

The 4-hour chart for spot silver also shows that the price is trading within the ascending broadening wedge resistance area. A breach above $100 will likely cause another strong surge in the silver market. However, the $70 support level is a strong short-term support.

US Dollar Technical Analysis

The daily chart for the USD Index shows that the index has broken the 200-day SMA with the short-term consolidation still showing a negative bias. The index is needed to break above 100.50 in order to stay bullish. However, a failure to hold the 98.50 support level will mean more downside towards the 96.50 level. A break above 100.50 will likely mean further upside towards the 102 level.

The 4-hour chart for the USD Index indicates that the index is consolidating between the 96.50 and 100.50. As long as this range remains intact, the next step of the USD Index will probably be up in the air. A break below 96.50 will bring in a strong drop towards the 90 area.