Gold and Silver Technical Analysis: Correction Continues as Dollar Rebounds from Support

Gold (XAU) and silver (XAG) prices dropped sharply as risk appetite returned. Gold fell over $70 on Thursday and hit a low of $3,202. On the other hand, silver also came under pressure as demand for safe havens weakened. Investors reacted to news that President Trump exempted some auto tariffs and advanced trade talks with key partners, sparking optimism in equity markets.

Moreover, the US dollar strengthened as trade tensions with China and other countries eased. This made gold and silver less attractive to foreign buyers. Treasury yields jumped, with the 10-year yield rising to 4.23%. Higher yields increase the opportunity cost of holding non-yielding assets, such as gold and silver, adding further downside pressure.

Despite the rally in the US dollar index, US macro data remains weak. Q1 GDP contracted, and jobless claims rose to 241K, above the expected 224 K. Moreover, manufacturing activity was disappointing, showing signs of slowing demand and continued layoffs. These factors raise concerns about a potential US recession, which could eventually support gold and silver as defensive assets.

The market now awaits the NFP data, which could provide further guidance on gold and silver prices. If Friday’s Nonfarm Payrolls report disappoints, it may push the Fed toward early rate cuts. A weaker labor report would likely weigh on the US dollar and boost demand for precious metals, helping prices recover from current lows.

Gold (XAU) Technical Analysis

Gold Daily Chart – Correction

The daily chart for gold shows a correction from the strong resistance at $3,500, with the price moving toward the support zone at the $3,200–$3,150 levels. This support is highlighted by the red circle, indicating the upper boundary of the ascending channel. The 50-day SMA lies around $3,090, which confirms strong support. This correction was necessary to stabilize the recent gold rally, which had reached $3,500.

Gold 4-Hour Chart – Ascending Channel

The 4-hour chart for gold shows that despite the correction from the overbought region, the overall price structure remains bullish. The price trades within the ascending channel, displaying bullish price action. The correction from $3,500 is targeting $3,150 as a key support level. However, the intense volatility in financial markets keeps the price uncertain.

Silver (XAG) Technical Analysis

Silver Daily Chart – Resistance of 200-Day SMA

The daily chart for silver indicates that the price remains firmly bullish, trading above the 200-day SMA. Consolidation above $30 strengthens the bullish case and increases the likelihood of a breakout above $35. A break above $35 could lead the price toward $43 and $50.

Silver 4-Hour Chart – Positive Development

The 4-hour chart for silver shows that the price consolidates above $31.80 and is looking for further upside. The strong key reversal from the $28 region and the double bottom formation indicate that the correction will likely be bought, and the price will continue to rise. The key level remains at $35.

US Dollar (DXY) Technical Analysis

US Dollar Daily – Rebound within Bearish Pressure

The daily chart for the US dollar index shows that the index has attempted a rebound from the strong support zone near 98 and is approaching the 100–100.65 region, which marks the first level of resistance for this move. A break above 100.65 would likely extend the rally toward the 103 area. However, a break below 98 would signal a potential drop to 96.

US Dollar 4-Hour Chart – Descending Channel

The 4-hour chart for the US dollar index shows that the index has formed an inverted head and shoulders pattern and is approaching the resistance near the 101 region. This resistance aligns with the daily resistance at 100.65. A break above this area could push the index toward 102.75.