Gold and Silver Rally as Fed Caution, Trade Tensions, and Dollar Weakness Fuel Demand

Gold (XAU) prices continue to surge as safe-haven demand dominates the market. Investors reacted cautiously to Federal Reserve Chair Jerome Powell’s latest remarks, which leaned slightly dovish. Although Powell acknowledged stronger-than-expected economic activity, he also highlighted rising risks to the labour market and persistent inflation. His comments supported existing expectations for an October rate cut, keeping gold attractive as a non-yielding asset amid potential monetary easing.

Moreover, the geopolitical tensions have further boosted gold’s appeal. The U.S.-China trade conflict escalated after President Trump threatened 100% tariffs on Chinese goods, prompting Beijing to retaliate with export restrictions and port fees. This trade war rhetoric, coupled with the prolonged U.S. government shutdown, has fueled fears of global instability. As a result, gold surged above $4,150 and now trades near $4,200.

On the other hand, the market sentiment reflects growing uncertainty in the broader economy. The chart below shows that the NFIB Small Business Optimism Index dropped to 98.8.

Moreover, the economic policy uncertainty in the U.S. has surged to elevated levels in October 2025, reaching over 460. The high uncertainty boosts demand for gold and silver (XAG), as investors seek stability amid unclear fiscal and trade policies. Therefore, this spike in policy uncertainty strengthens the bullish case for gold prices. The combination of policy and geopolitical uncertainty creates a favourable environment for the gold market.

Gold Technical Analysis

XAUUSD Daily Chart – Ascending Broadening Wedge

The daily chart for spot gold shows that the price has broken above the $4,000 level and is approaching resistance near the $4,200 area. The chart indicates that gold continues its strong upward surge, entering uncharted territory. This occurs during a parabolic move, where price accelerates sharply, often disregarding traditional technical resistance levels.

XAUUSD 4-Hour Chart – Ascending Channel

The 4-hour chart for spot gold shows that the price has broken above the $4,130 resistance level, which marked the upper boundary of the ascending channel pattern. It has now entered an extended channel, as indicated by the red dotted trend line. This trend line highlights resistance at the $4,200 level, and a breakout above it could push gold prices even higher from current levels.

Silver Technical Analysis

XAGUSD Daily Chart – Super Bullish Momentum

The daily chart for spot silver shows a strong bullish structure, highlighted by the formation of an inverted head and shoulders pattern along with several other bullish patterns. The price has broken above the $35 level and initiated a sharp surge past the $50 mark.

The bullish momentum accelerated after clearing the $39 level, and the breakout above $50 suggests that silver may continue to rise despite technically overbought conditions. There are still no clear signs of a correction, and the market continues to push higher.

XAGUSD 4-Hour Chart – Bullish Momentum

The 4-hour chart for spot silver shows that the price continues to surge higher after forming a strong bullish structure above the $35 support. This level now acts as a key long-term base. Silver has broken above the critical $50 resistance, signalling a continuation of the upward trend. The breakout indicates that momentum may accelerate further in the coming sessions.

US Dollar Index Technical Analysis

US Dollar Daily – Consolidation

The daily chart for the U.S. Dollar Index shows a rebound from the 96.50 support level, but strong resistance has formed around the 99.50 area. This resistance has triggered renewed selling pressure, pushing the index back toward the 98.00 support zone.

A decisive break below the 96.00 level could lead to a sharp decline in the U.S. Dollar Index, which would further strengthen the bullish case for gold and silver. Long-term charts suggest that if the index breaks below 96.00, it may fall toward the 90.00 level. In that scenario, gold could accelerate toward the $6,000 mark, while silver may rally into the $60–$70 range.

US Dollar 4-Hour Chart – Consolidation

The 4-hour chart for the U.S. Dollar Index shows that the index found resistance at the 99.20 level and has started to correct lower. A break below 98.60 would reinforce the bearish trend and signal further downside pressure. If the index breaks below the critical 96.00 support, it could trigger a sharp decline in the dollar’s value.