Gold and Silver Surge Above $5,200 as U.S. Dollar Breaks Down and Fed Decision Looms

Gold (XAUUSD) price set new record highs above $5,225 amid a weakening of U.S. dollar (USD) and continuing uncertainty. The weakness in the US dollar resulted in an increase in demand for dollar priced assets and strengthened the position of gold as a store of value. Moreover, the continued geopolitical tensions increased market volatility and demand for safe havens. The market is now looking for the Federal Reserve decision which may introduce further volatility in the precious metals sector.

The decline in USD is further supported by comments from President Trump, which weighed on USD and helped fuel the move in precious metals. The dollar index dropped to its lowest level in years, which eases financial conditions for gold. The threats of trade and political pressure added to the market risk. That mix continued to favor hard assets over paper ones.

Similarly, the silver (XAG) price moved higher with the gold market, supported by same macro forces. A lower dollar and fears of inflation were good for silver as monetary and industrial metal.

The market attention is now focused on the Fed’s message. A firm policy stance may continue to put pressure on the U.S. dollar and support precious metals. Any hawkish tone could slow the rally. But there is still strong underlying demand. With data on confidence worsening and risks unsolved, gold and silver keep drawing in defensive flows.

Gold Price Hits Record $5,225 Amid Dollar Breakdowns

The gold price surged above $5,200 and marked a new record level within the parabolic trend. The price continues to trend higher within an extremely overbought region, as seen by the RSI. However, price shows no signs of reversal as the U.S. dollar weakens.

This continued strength in the gold market indicates that 2026 might be another record year of the decade for gold. The price is trading toward the $5,400 level. However, any correction toward $5,000 may be seen a buying opportunity for short-term traders.

The short-term price action shows that the gold price is overextended above $5,000, as seen by the RSI. The RSI is also not rising above the 80 level and is showing a divergence. This indicates that the price may correct lower in the short term.

However, the strong bullish momentum does not show signs of correction. A break above $5,500 in the short term will indicate that the gold price is moving toward $6,000. However, any correction below $5,000 will indicate that the price may correct lower towards $4,800.

Silver Surges with Gold Amid Macro Tailwinds

The daily chart for the silver price shows an overextension above $100, which indicates that market is entering overbought mode. When the price moves into this mode, it usually marks a short-term top and corrects sharply lower.

However, the longer-term and short-term price action indicates further upside in the short term. Any correction back toward the $60 to $80 region will indicate a strong buying opportunity for traders.

The 4-hour chart for spot silver shows that silver broke above the $100 region and retraced back to hit $100, attracting new buying interest. The price is again trending to break above the $117 region. A break above $117 indicates further upside toward $150 in the short term.

As long as the $100 support in spot silver holds, the market may enter and may target new milestones in the short term.

U.S. Dollar Index Breakdown Fuels Precious Metals Rally

The overextension in the gold and silver market is due to the extreme pressure on the U.S. Dollar Index. The U.S. Dollar Index has broken long-term support at 96, which indicates that index is heading toward 90.

As the U.S. Dollar Index trades toward 90, the gold and silver markets may further trend higher. However, the daily chart for U.S. Dollar Index shows that the index has approached the oversold region. Therefore, any rebound from current levels may occur. However, this rebound will likely be limited and indicate further downside in the index.

The 4-hour chart for the U.S. Dollar Index also shows extreme bearish pressure and a breakout below the 96 level. This breakout has opened the door for the U.S. Dollar Index to trade towards 90.

However, the 4-hour chart also shows that the index is currently at extremely oversold level. This oversold level indicates a rebound might develop in the index. This rebound will trigger another selling opportunity for U.S. Dollar towards lower levels.