Gold and Silver Technical Analysis: XAUUSD Builds Base, XAGUSD Corrects from Overbought Levels

Gold (XAUUSD) prices dropped on Tuesday as investors turned cautious ahead of potential tariff announcements. Spot gold dropped to around $3,320 and rebounded towards $3,335 during the Asian trading session. The decline came despite growing geopolitical tensions and steady demand for safe-haven assets. The strength in the US dollar after the release of US inflation data also contributed to the downside pressure in gold.

The US Consumer Price Index increased 0.3% in June, which marks the biggest increase since January.

Moreover, the annual inflation rate in the US increased for the second consecutive month to 2.7% in June 2025. This is the highest level since February and in line with expectations.

The inflation data failed to spark a rally in gold, as traders had already factored the inflation outcome into their expectations. Moreover, the gold market lacked a fresh catalyst to break above recent highs.

President Trump’s threats to impose 30% tariffs on the EU and Mexico added uncertainty. While this geopolitical risk could support gold, it did not offset the immediate impact of dollar strength and muted inflation surprise. However, Trump’s call for lower interest rates could support gold in the medium term, especially if the Fed responds with a rate cut in September.

The markets are now looking to the upcoming US Producer Price Index data for further clues. The gold may remain range-bound until the release of this data. However, the long-term bullish outlook remains intact amid macroeconomic uncertainty and expectations of central bank easing.

Gold Technical Analysis

XAUUSD Daily Chart – Ascending Triangle Pattern

The daily chart for spot gold indicates that the price is consolidating within an ascending triangle, preparing for its next move. Multiple bullish hammers have formed at the triangle’s support, and the price has closed above the 50-day SMA, indicating a potential short-term increase toward the $3,450 level. A breakout above $3,450 would likely trigger the next strong upside move. The RSI remains flat but holds above the 50 level, suggesting continued bullish momentum.

XAUUSD 4-Hour Chart – Consolidation

The 4-hour chart for spot gold indicates that the price is consolidating within a bullish structure, forming an inverted head-and-shoulders pattern below the $3,400 level. A break above the $3,430 area could lift spot gold toward $3,500, and a breakout above $3,500 would likely trigger strong upside momentum.

Silver Technical Analysis

XAGUSD Daily Chart – Correction from Overbought Region

The daily chart for spot silver (XAGUSD) shows that the price has reached the initial target near the $39 area and formed a bearish hammer, triggering a correction. The next strong support lies around $37, which marks the neckline of the cup pattern. The overall structure remains strongly bullish, as spot silver has formed an Adam and Eve pattern followed by a breakout above the $35 level. This correction is likely to offer a new buying opportunity for short-term traders.

XAGUSD 4-Hour Chart – Correction

The 4-hour chart for spot silver shows that the price formed a bottom near the $31.80 and $34.50 levels before breaking above the $37 area. It is now correcting lower from the extremely overbought region and is seeking strong support around the $37 level.

US Dollar Index Technical Analysis

US Dollar Daily – Rebound

The daily chart for the US Dollar Index displays a strong bearish price structure, characterised by a head-and-shoulders pattern. The index found solid support around the 96 level and has since initiated a rebound. The release of inflation data has fueled bullish momentum, pushing the index toward the 50-day SMA, which is currently near the 99 area. A break above the 50-day SMA could take the index toward the 100.50 level.

US Dollar 4-Hour Chart – Breakout from Descending Channel

The 4-hour chart for the US Dollar Index shows a breakout above the descending channel after a prolonged consolidation along the trendline. This breakout has triggered bullish momentum toward the 99.00 and 100.50 levels as the initial targets. However, the overall trend remains bearish, and this rebound may be limited to below the 100.50 resistance level. A sustained break above 100.50 could push the index further toward the 102.00 area.