Gold Breaks Out as Venezuela Crisis and Dovish Fed Boost Safe-Haven Demand

Gold (XAU) prices surged above the $4,400 region during Asian trading on Monday. This move was because of a US operation that resulted in the capture of Venezuelan President Nicolas Maduro. This unexpected strike created new geopolitical tensions and increased demand for safe-haven assets.

The market is afraid of further instability in Latin America. U.S. officials hinted at using the leverage of oil for political change. As a result, traders rushed into gold, expecting increased uncertainty and long lasting risk premiums. On the other hand, the Federal Reserve’s dovish stance is supportive of gold. However, good U.S. jobs data could boost the dollar and put a temporary ceiling on gold prices.

Gold Technical Analysis

The daily chart for spot gold indicates that the price is rebounding from the strong support at an important junction and is looking for higher levels. This important junction is formed by the strong support of the ascending triangle and the ascending broadening wedge pattern. A break above $4,550 will signal further upside to the $5,000 level. However, a break below $4,260 will signal a downside move to lower levels.

The 4-hour chart for spot gold shows the price consolidating during thin liquidity and found support at the $4,380 level. The price rebounds higher during a bullish pattern. As long as gold maintains the $4,260 level, the next move in the gold market will likely be higher.

Silver Technical Analysis

The daily chart for spot silver (XAG) shows that the price initiated a correction from a strong resistance at the $84 level and found support at the $70 level. After forming support, spot silver rebounded higher, which indicates that the silver market will likely trade higher.

The strong long-term support now remains within the $60 to $64 level. As long as this support level holds, the next move in the silver market will likely be towards the $100 region. The emergence of an ascending broadening wedge pattern highlights strong volatility and continued upside during the next few weeks.

The 4-hour chart for spot silver further reiterates the strong volatility as the price consolidates within the ascending broadening wedge pattern. The spot silver formed strong support at the $70 level and initiated a strong rebound towards the $84 level. A break above $84 will initiate a strong move towards the $100 level.

US Dollar Index Technical Analysis

The daily chart for US Dollar Index shows that the index is rebounding from the support of the 97.50 level and moving towards the 200-day SMA at the 99 level. As long as the index remains below the 99 level, the next move in the index will likely be lower.

However, a confirmed break above 99 level will take the index towards the 100.50 level, which is the key level for further upside. A break of 100.50 will be a bullish signal for the US Dollar Index. However, a break below 96.50 will trigger another move towards 90.

The 4-hour chart for the USD Index shows that the index has formed a double top pattern at the 100.50 level and is looking for the next move. A break below 97.50 will indicate further downside towards 96.50. However, a recovery above 100.50 will be a bullish sign and indicate a move towards the 102 level.