Gold (XAUUSD) and Silver Analysis: Trade Deals and Geopolitical Calm Weaken Safe-Haven Demand

Gold (XAUUSD) dropped sharply on Friday after reaching an intraday high of $3,328. The decline was driven by a shift in investor sentiment toward riskier assets amid improving global conditions. Tensions between Israel and Iran have de-escalated. Signs of diplomatic progress from Tehran have also emerged.

The US–China trade agreement, confirmed by the White House on Thursday, marked a major turning point in global trade sentiment. Investors welcomed the deal, along with announcements of potential follow-up agreements with countries such as South Korea, Vietnam, and the EU. US Commerce Secretary Howard Lutnick also revealed that China will deliver rare earth materials to the US, raising expectations that the US will lift its countermeasures. These developments have weakened the bullish outlook for gold as geopolitical and economic tensions ease.

On the other hand, the core PCE Price Index rose 2.7% year-over-year in May, slightly above estimates and April’s 2.6%. Moreover, the headline inflation matched expectations at 2.3% year-over-year. However, despite the uptick, progress toward disinflation remained slow.

Moreover, the consumer sentiment improved, with the University of Michigan index increasing to 60.7. Inflation expectations declined modestly, which may reduce pressure on the Fed to act aggressively, keeping yields stable and gold less attractive in the short term.

The US 10-year Treasury yield held steady at 4.242%, while the US Dollar Index remains weak at 97.28. Despite weakness in the US dollar, gold faced selling pressure. Optimism about economic recovery reduced demand for safe havens. Easing geopolitical risks also pulled investor focus away from gold. Minneapolis Fed President Neel Kashkari still expects two rate cuts in 2025. Money markets are now pricing in 63.5 basis points of easing by year-end. These factors suggest that gold may remain under pressure unless renewed uncertainty or weaker economic data reignites safe-haven demand.

Gold Technical Analysis

XAUUSD Daily Chart – Ascending Triangle

The daily chart for spot gold shows that the price is at the edge of the ascending triangle and has broken below the 50-day SMA. This support intersects with the black trendline, which marks the lower boundary of the ascending channel.

A break below this level could open the path toward the 100-day SMA, located around the $3,150 area. Additionally, a confirmed breakout from the triangle would signal a continued downward move toward the $3,000 region.

This correction is likely to present an opportunity for investors to position themselves for the next strong rally in the second half of 2025.

XAUUSD 4-Hour Chart – Consolidation

The 4-hour chart for spot gold also shows that the price is approaching the $3,230 support level. A break below this level would signal a continued downward trend toward the $3,150 and $3,000 regions.

Silver Technical Analysis

XAGUSD Daily Chart – Correction within Bullish Structure

The daily chart for spot silver (XAGUSD) shows that the price has been consolidating after breaking above the $35 level. This consolidation is bringing the price back toward the breakout zone near $35. A correction toward this support may offer another buying opportunity for a move to higher levels. Additionally, the 50-day SMA is currently located around the $34.20 area.

XAGUSD 4-Hour Chart – Bullish Momentum

The 4-hour chart for spot silver also shows that the price is correcting toward the orange zone, which represents a strong long-term support area. This correction may offer an opportunity for the next buy signal, supported by the emergence of strong bullish patterns around the $31.80 level.

US Dollar Index Technical Analysis

US Dollar Daily – Bearish Pressure

The US Dollar Index remains under bearish pressure and has broken below the orange zone, which marks a long-term support area. This decline follows a rejection at the 50-day SMA. As long as the index stays below the 100.50 level, it is likely to continue its downward trend toward the 90 area.

US Dollar 4-Hour Chart – Descending Channel

The 4-hour chart for the US Dollar Index also shows that the index is trading within a descending channel and remains under bearish pressure. The next support level lies around 94.50, and a break below this point would signal a continued decline toward the 90 level, which aligns with the red trendline.