Gold and Silver Technical Analysis: Inflation, Tariffs, and Weak Dollar Drive Bullish Momentum

Gold (XAUUSD) stays strong as inflation remains high. Core PCE inflation has been above the Fed’s 2% goal for more than four years. Typically, high inflation means the Fed keeps rates high, but slowing economic growth is creating pressure to cut rates. The Fed now faces a tough choice between fighting inflation and supporting the economy. This uncertainty, combined with stubborn inflation, makes gold more attractive as a safe-haven investment.

Moreover, the ISM services survey showed a sharp rise in the prices index to 69.9% in July. Higher import tariffs are likely to push CPI and PCE inflation even higher as businesses pass increased costs to consumers. This environment supports stronger gold demand from central banks and private investors. Inflation hedging could become a major driver for gold in the coming months.

However, market uncertainty remains high. The Fed’s decision-making will depend on upcoming inflation data and other key economic releases. The Prices Paid sub-index of the Services PMI is at its highest since November 2022, signalling ongoing cost pressures. If inflation remains elevated, the Fed may delay aggressive rate cuts, limiting gold’s immediate upside. However, geopolitical tensions keep the long-term gold outlook bullish.

Gold Technical Analysis

XAUUSD Daily Chart – Bullish Momentum

The daily chart for spot gold shows a break above the 50-day SMA, with strong bullish momentum toward the $3,450 level. A move above $3,450 could trigger a surge toward the $4,000 region. The 50-day SMA trading above the 100- and 200-day SMAs confirms strong bullish momentum and signals potential for an upside breakout.

XAUUSD 4-Hour Chart – Consolidation

The 4-hour chart for spot gold shows the price consolidating between the $3,250 and $3,500 levels. The rebound from $3,250 signals positive price action and suggests potential for an upside move. A break above $3,450 could push prices toward the $3,500 level, while a move above $3,500 may open the way toward higher targets.

Silver Technical Analysis

XAGUSD Daily Chart – Inside Bar

The daily chart for spot silver shows that the price formed an inside bar last week, following a rebound from support at the 50-day SMA near the $36 area. A break above last week’s high could trigger strong bullish momentum, pushing silver prices toward the $40 and $42 levels.

The emergence of smaller bullish patterns and the positive price action over the past year suggest that silver is likely to continue trading higher.

XAGUSD 4-Hour Chart – Bullish Price Action

The 4-hour chart for spot silver shows an intense bullish price action, forming an inverted head and shoulders pattern and a rounding bottom. The price has established strong support above the $34.50 region, indicating significant bullish potential. A break above the $40 level could trigger a strong upside move in silver prices.

US Dollar Index Technical Analysis

US Dollar Daily – Negative Price Action

The daily chart for the US Dollar Index shows a bearish price action in 2025. The emergence of a head and shoulders pattern, followed by intense negative price action below the 50-day SMA, indicates that the index will likely continue lower.

The rebound from the long-term support at the 96 level has created strong resistance at 100.50, and the price is struggling to break above the 50-day SMA. A break below the 96 area will likely trigger a further sharp drop in the index. However, a break above 100.50 could push the index toward the 102 level.

US Dollar 4-Hour Chart – Ascending Broadening Wedge

The 4-hour chart for the US Dollar Index shows that the index has been consolidating between the 100 and 96 levels. A breakout from either of these levels will indicate the next move in the index.

Moreover, the US Dollar Index has formed an ascending broadening wedge pattern at the lower level, suggesting that a break below the 97 area will initiate the subsequent drop in the index.