Gold (XAUUSD) and Silver Cool Off After Rally: Will Key Support Zones Hold?

Gold (XAU) dropped from the $4,250 resistance level and tested the support zone around $4,030 on Friday. This decline has placed the metal in a consolidation phase with a slight bearish bias. Traders are now watching upcoming speeches from Fed officials, including John Williams and Neel Kashkari. These comments may provide fresh policy signals that could shape the short-term direction.

Moreover, improved sentiment after the U.S. government’s reopening reduced safe-haven demand for gold. President Trump ended the record 43-day shutdown by signing a funding bill, prompting federal employees to return to work. However, the return of government operations means delayed economic reports will soon be released. These reports could reveal weaker job growth and slowing momentum in the U.S. economy.

Gold’s upside may remain limited as Fed officials strike a more hawkish tone, reducing hopes for a December rate cut. Kansas City Fed President Jeffery Schmid said policy should “lean against demand growth,” reinforcing a restrictive stance. Markets now assign only a 45% chance of a cut, down from nearly 63% last week. This shift weighs on short‑term momentum for gold.

Gold Technical Analysis

XAUUSD Daily Chart – Resistance Zone

The daily chart for spot gold shows that the price hit resistance near $4,250 at the upper boundary of the ascending wedge pattern before dropping toward the red trendline support.

This decline was triggered by strong resistance and has increased short-term uncertainty. A breakout above $4,250 is needed to push prices higher. On the other hand, a break below $3,900 could signal further downside. The RSI is retreating from overbought levels, and this pullback appears to be a healthy cooling phase. This correction allows gold to stabilize before the next significant upward move.

XAUUSD 4-Hour Chart – Uncertainty

The 4-hour chart shows that the recent drop in gold price originated from the neckline of the double-topped pattern. This move pulled the price toward the black trendline support.

A break below the black-dotted trend line at the $3,900 region will be a negative sign and induce further downside in the gold price.

Silver Technical Analysis

XAGUSD Daily Chart – Resistance

The daily chart for spot silver (XAG) shows that the price dropped from the record level of $54.40. However, the overall structure remains strong as long as the price holds above the $45 area. A break below $49.30 could push silver further down toward the $44–$45 support zone. On the other hand, a breakout above $54.40 is needed to confirm renewed upside momentum.

XAGUSD 4-Hour Chart – Bullish Price Structure

The 4-hour chart for spot silver shows the formation of a strong bullish price structure. The sharp drop from the $54.40 level did not disrupt the overall bullish setup. The price remains above the $49.30 support level. This level marks the neckline of the inverted head-and-shoulders pattern. As long as silver remains above it, the price is likely to consolidate below $54.40 before preparing for the next move higher.

US Dollar Index Technical Analysis

US Dollar Daily – Consolidation

The daily chart for the US dollar index shows that it dropped from resistance at the 100.50 level, which aligns with the 200-day SMA. The index is currently consolidating above the black trendline while seeking its next direction.

A breakout above 100.50 could push the index higher toward the 102 level. On the other hand, a break below 98 would be a bearish signal, potentially driving it down to 96.50. Overall, the index is consolidating within the 96–100 range as it waits for a decisive move.

US Dollar 4-Hour Chart – Consolidation

The 4-hour chart for the USD Index shows that it is consolidating between the 96.50 and 100.50 levels. A breakout from either side of this range will likely signal the end of the consolidation and determine the next directional move. The RSI is rebounding from lower levels, suggesting potential short-term upside in the USD Index. However, the 100.50 level remains a key resistance zone, continuing to cap further gains.