Gold (XAUUSD) and Silver Hit New Highs Ahead of Fed Decision as US Dollar Weakens

Gold (XAUUSD) prices surged to a record high of $3,700 per ounce, driven by growing expectations of a Federal Reserve rate cut. Traders are almost certain the Fed will reduce rates by 25 basis points this week, with some even pricing in a larger 50-basis-point cut. This policy shift, combined with U.S. President Trump’s public push for deeper cuts, has amplified bullish momentum in the gold market.

A sharp drop in the U.S. dollar has further fueled the gold rally. The dollar index dropped to a two-month low, making gold cheaper for foreign buyers. At the same time, global growth concerns and geopolitical instability are driving strong safe-haven demand.

Moreover, central banks continue to add gold to their reserves, and investors are turning to bullion as a hedge against inflation, recession, and trade uncertainty. These combined forces have helped gold rise over 40% since the start of the year. The latest breakout above $3,600 confirms renewed buying interest.

Despite the strong momentum, investors must be cautious ahead of the Fed’s official announcement. A brief phase of profit-taking is possible given the rapid rise and proximity to major resistance zones. However, the broader trend remains bullish. Unless the Fed surprises with a hawkish stance, gold is likely to maintain its uptrend, with the $4,000 level emerging as the next key psychological target for the metal.

Gold Technical Analysis

XAUUSD Daily Chart – Bullish Momentum After Breakout

The daily chart for spot gold shows that the price has broken above the $3,500 region and continues to exhibit strong bullish momentum. Minor resistance near $3,700 was reached ahead of the Fed announcement, suggesting a short-term correction is possible.

The key long-term support now lies in the $3,450–$3,500 region, which also aligns with the 50-day SMA. A confirmed breakout above the $3,700 level would likely extend the rally in the gold market. However, the RSI indicates overbought conditions, pointing to a potential pullback toward the $3,500–$3,600 zone before the next upward move.

XAUUSD 4-Hour Chart – Positive Price Development

The 4-hour chart for spot gold shows that the price has broken out of the bull flag pattern. The price continues to hit new record levels after a breakout from a bull flag. The strong consolidation between the $3,250 and $3,500 levels signals a bullish price structure, supporting the case for further upside. Any correction in the gold market back toward the $3,500–$3,600 region is likely to be viewed as a buying opportunity for investors.

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Silver Technical Analysis

XAGUSD Daily Chart – Strong Bullish Momentum

The daily chart for spot silver (XAGUSD) shows that the price has formed a strong bullish structure above the $35 region. After reaching the overbought zone near the $43 level, silver initiated a correction. Strong support now lies between the $40.00 and $39.40 area, where any pullback is likely to be seen as a buying opportunity, with upside potential targeting the $44 level in the coming days.

XAGUSD 4-Hour Chart – Positive Price Development

The 4-hour chart for spot silver shows that the price is trading within an ascending broadening wedge pattern between the $40.90 and $43.00 levels. The price has hit resistance at $43.00 and continues to consolidate in this area. Any drop toward the $40.00 to $40.90 region is likely to trigger another strong buying opportunity in spot silver.

US Dollar Index Technical Analysis

US Dollar Daily – Bear Flag

The daily chart for the US Dollar Index shows that it has broken a clear flag pattern and now displays intense bearish price action below the 50-day SMA. The index has reached a key support level at 96.50, where it is currently rebounding.

This rebound may trigger a short-term correction in the gold market. However, the next significant move in the US Dollar Index and commodity markets will likely depend on the upcoming Fed decision.

US Dollar 4-Hour Chart – Breakout from One-Month Consolidation

The 4-hour chart for the US Dollar Index shows a breakdown from the one-month consolidation below 97.20, reaching support at 96.50. The index now appears extremely oversold in the short term, as indicated by the RSI. This oversold condition may trigger a rebound toward the 97.20 level.