Gold (XAUUSD) and Silver Analysis: Breakouts Point to Higher Targets Amid Fed Uncertainty

Gold (XAUUSD) prices broke the key level of $3,500 and surged higher to produce a new record at $3,540. This breakout came after the 4 months of consolidation, which indicates that the next move in the gold market will be higher during the next few days.

A combination of fundamental drivers has fueled the recent rally in gold. The ongoing weakness in the US Dollar, concerns over the Federal Reserve’s independence, and rising geopolitical tensions have pushed investors toward safe-haven assets. The metal also benefits from heightened uncertainty around US trade policy and tariffs. As market risks grow, demand for gold as a hedge continues to increase.

Moreover, the new economic data added mixed signals to the gold outlook. The ISM Manufacturing PMI came in weaker than expected at 48.7, signaling ongoing contraction.

However, a rebound in the New Orders Index points to a slight recovery in factory demand. The US Dollar weakened modestly after the data release, which helped gold maintain support.

On the other hand, the broader bond market turmoil has added another layer of complexity. A surge in UK Gilt yields spilled into global markets, pushing US Treasury yields higher. This lifted the US Dollar temporarily from the support level.

However, the looming Fed rate cut in September, supported by a 91% probability priced in by markets, remains a key catalyst. The market is now looking to Friday’s Nonfarm Payrolls report for confirmation. If job data disappoints, gold may resume its upward march toward $3,600.

Gold Technical Analysis

XAUUSD Daily Chart – Strong Breakout

The daily chart for spot gold shows that the price has broken the strong resistance around the $3,500 level and initiated a sharp surge higher. This breakout follows a 4-month consolidation, indicating that the next move could be even stronger. Gold may continue to climb and trade toward the $3,700 to $3,800 region over the next few days.

XAUUSD 4-Hour Chart – Positive Price Development

The 4-hour chart for spot gold shows that the breakout above $3,500 was strong. It followed a solid bullish formation within a 4-month consolidation pattern. Despite the breakout, gold is extremely overbought in the short term, which suggests a potential correction. However, this correction may develop only after a continued surge in prices.

The breakout from the prolonged consolidation adds strength to the rally. The $3,500 level now acts as strong support, while the short-term target remains at $3,600.

Silver Technical Analysis

XAGUSD Daily Chart – Surge After Breakout

The daily chart for spot silver (XAGUSD) shows a strong bullish price action, highlighted by an inverted head and shoulders pattern along with other bullish formations. Prices have broken above the $35 level following positive consolidation during April, May, and June. This breakout signals that the next move in silver is likely to be higher.

Additionally, silver has breached the $39.40 resistance after rebounding from the 50-day SMA, reinforcing the bullish momentum. The immediate resistance now lies in the $42 to $43 region.

XAGUSD 4-Hour Chart – Positive Price Development

The 4-hour chart for spot silver shows that the price has broken above the $39.40 level and is displaying positive price action. The emergence of inverted head and shoulders patterns in June and August 2025 signals that silver prices are likely to move higher from here.

US Dollar Index Technical Analysis

US Dollar Daily – Bear Flag

The daily chart for the US Dollar Index shows that it is forming a bear flag pattern below the 100.50 level. The index is consolidating around the support of this pattern and initiated a strong rebound on Tuesday. This rebound suggests that the index may continue to trade higher in the short term. However, as long as it remains below 100.50, the broader outlook points to a move lower.

US Dollar 4-Hour Chart – Consolidation

The 4-hour chart for the US Dollar Index shows that it is forming a bullish price action above the 96.50 and 97.20 support levels. The immediate resistance lies at the 98.60 and 99.20 levels. A break above 99.20 could push the US Dollar Index toward the 100.50 level. As long as the index holds above 96.50, the short-term outlook remains uncertain.