Gold (XAUUSD) and Silver Rally on Political Turmoil and Weak US Data

Gold (XAUUSD) prices increased to a two-week high near $3,385 on Wednesday. The increase came amid political uncertainty following President Donald Trump’s removal of Fed Governor Lisa Cook. Markets viewed the move as a challenge to the Fed’s independence. Therefore, investors turned to gold as a safe-haven asset.

Moreover, expectations of rate cuts added further support to gold prices. Fed Chair Jerome Powell signalled a possible cut in September. Traders increased their bets on monetary easing despite lingering inflation risks.

On the other hand, the US durable goods orders dropped 2.8% in July, following a sharp 9.4% drop in June. This decline was slightly better than the expected 4% but still signals weakening demand. The firms had front-loaded imports earlier to avoid new tariffs, leading to softer orders now.

Moreover, manufacturing orders decreased by 4%, while non-defence aircraft orders declined by 32.7%. As a result, these figures indicate slowing economic momentum. Consequently, growing concerns about growth boost gold’s safe-haven demand. In addition, weak manufacturing raises the case for Fed rate cuts, adding further support to gold prices.

The market is now awaiting the US GDP and PCE inflation figures, which will provide key direction for gold. Strong growth or hotter inflation could strengthen the dollar and weigh on gold.

Gold Technical Analysis

XAUUSD Daily Chart – Ascending Triangle

The daily chart for spot gold shows that the metal is forming a strong base. Gold has found support at the $3,250 level and initiated a rebound toward the resistance area of $3,450. The price is compressing within the edge of an ascending triangle pattern, signalling the potential for the next move.

The RSI remains above the mid-level of 50, and price action is consolidating above the 50-day SMA, which increases the possibility of an upside breakout. A break above $3,450 will likely trigger a gradual move toward $3,500. Moreover, a decisive break above $3,500 could open the way for much higher levels in spot gold.

XAUUSD 4-Hour Chart – Positive Price Development

The 4-hour chart for spot gold shows that the price is consolidating between the $3,250 and $3,450 regions. However, the price structure within this band remains firmly bullish, indicating potential for an upside breakout.

Moreover, the seasonal correction and tendency for choppy trading in gold are expected to end in August. Therefore, the price may continue to move higher from this support consolidation zone. A break above $3,500 will likely trigger a strong surge in gold prices.

Silver Technical Analysis

XAGUSD Daily Chart – Bullish Hammers at 50-Day SMA

The daily chart for spot silver shows that the price has found strong support at the 50-day SMA around the $36 level and continues to move higher. The repeated formation of bullish hammer candles each time the price touches the 50-day SMA highlights strong buying interest and bullish momentum. A break above the $40 level could push spot silver toward the $42–$43 region.

XAGUSD 4-Hour Chart – Positive Price Development

The 4-hour chart for spot silver also shows bullish price action above $31.80. The price has broken the key level of $34.50 and is now forming bullish price action above this support. This structure indicates that the next direction for silver is higher. A break above $40 will signal further upside toward the $43 area.

US Dollar Index Technical Analysis

US Dollar Daily – Bear Flag

The daily chart for the US Dollar Index shows that the index has formed a bear flag following the consolidation in July and August. This bear flag pattern is strongly bearish, and a break below the 97 level would likely trigger the subsequent drop in the index toward the 90 area.

It is also important to note that the 100.50 level has now become key resistance within this bear flag structure. Therefore, if the index rebounds higher, the resistance zone between 100.50 and 101 will be a key area to sell the US Dollar Index, potentially leading to lower levels.

US Dollar 4-Hour Chart – Ascending Broadening Wedge

The 4-hour chart for the US Dollar Index shows the formation of an ascending broadening wedge pattern. The breakdown below this pattern, following Powell’s speech at Jackson Hole, proved to be a false breakout.

The index is now consolidating sideways within the red zone and looks poised for a rebound. However, a break below the 97 level would be a strongly bearish signal and could drive the index toward much lower levels.