Gold and Silver Technical Analysis: Consolidation Signals Next Big Move Amid Geopolitical Risks

Gold (XAU) prices reversed Thursday’s losses and climbed above $3,300. This reversal was driven by strong volatility due to persistent geopolitical tensions. Ongoing conflicts in Ukraine, the Middle East, India, and Pakistan continue to support the safe-haven demand. However, the upside remains capped as traders weigh risk sentiment and upcoming trade negotiations.

The announcement of a limited US-UK trade deal eased recession fears. However, the 10% tariff on most imports remains in place, which tempers market optimism. The potential reduction of US tariffs on China from 145% to 50% adds further optimism and puts downward pressure on gold. Additionally, the upcoming talks in Switzerland between top US and Chinese officials may further influence market sentiment.

On the other hand, the US Dollar strengthened after the Federal Reserve signaled no immediate rate cuts. This hawkish stance pushed the dollar to a one-month high and reduced demand for non-yielding gold. Traders now await speeches from key FOMC members for more clarity on the rate outlook. A stronger dollar typically limits the upside for gold and silver (XAG).

Despite the trade deals, geopolitical concerns remain the primary driver of gold’s strength. Continued attacks in Ukraine despite a ceasefire, along with rising tensions involving Israel and the India-Pakistan border, continue to suppress risk appetite.

Gold (XAU) Technical Analysis

Gold Daily Chart – Resistance

The daily chart for gold shows that the price rejected the resistance area at $3,370 and is correcting lower. Strong support lies between the $3,100 and $3,200 zone. Moreover, the orange zone between $2,900 and $3,000 remains the pivot for this correction. Despite the pullback, the trend remains strongly bullish, and a break above $3,500 will likely trigger a strong rally toward the $4,000 zone.

Gold 4-Hour Chart – Short-Term Price Extension

The 4-hour chart for gold shows that the price has corrected to the support area of the ascending channel at $3,280 and is consolidating in this range. The trend remains bullish, and prices will likely consolidate their gains after the strong surge in Q1 2025.

Silver (XAG) Technical Analysis

Silver Daily Chart – Consolidation

The daily chart for silver shows that the price has formed a strong bullish structure and remains above the 200-day SMA. Consolidation above the 200-day SMA strengthens the bullish case toward the $35 level. A break above $35 is required to push prices toward the $42 area. However, the support zone between $31 and $28 must hold.

Silver 4-Hour Chart – Positive Development

The 4-hour silver chart also shows strong price action, with a double bottom pattern forming near the April and May lows. The pivotal resistance remains at $34.50; a break above this level is required for further upside.

US Dollar (DXY) Technical Analysis

US Dollar Daily – Bearish Pressure

The daily chart for the US Dollar Index shows a rebound from the long-term support zone around the 98 level. The index has reached 100.65, which has been acting as a strong long-term pivot. Strong resistance remains at the 50-day SMA, around the 101.80–102.00 area. However, the trend remains downward. A break above 103 is required to neutralize the downtrend.

US Dollar 4-Hour Chart – Inverted Head and Shoulders

The 4-hour chart for the US Dollar Index shows that the index has formed an inverted head and shoulders pattern at the long-term support area of 98. The immediate resistance at 100.50 was breached, and the index is now heading toward 101.80. It remains within the descending channel, and a break above 101.80 is required for further upside.