Gold (XAUUSD) and Silver Surge as Inflation Cools and Geopolitical Risks Rise

Gold (XAUUSD) prices are trending higher above $4,600 in early Asian trading. This rally followed the softer-than-expected US inflation data.

The inflation rate over the year was 2.7% and the core inflation rate was 2.6% as shown in the chart below. These numbers were the same as and in line with market expectations.

Moreover, the United States consumer prices increased by 0.3% month-on-month in December 2025 in line with market expectations and repeating the increase from September.

Traders raised bets on the Federal Reserve cutting interest rates this year. These expectations helped the gold and silver (XAGUSD) rally and increased the demand of precious metals. The focus is now on new data for confirmation.

Moreover, geopolitical risks are also helping gold. Iran’s crackdown on protests and US threats of intervention have increased tension in the markets. Traders move towards gold during periods of political unrest, which forces the demand for safe-haven.

The market is waiting for the U.S. Retail Sales and PPI data, which may add volatility. Stronger than expected numbers could boost the dollar and put pressure on gold in the short term. However, if inflation cools, gold may continue the rally.

Gold Technical Analysis

The gold price is still in the beginning of a new bull run as seen on the daily chart below. It is observed that the price is trading near the lower edge of new ascending broadening wedge pattern and looks set to surge above $5,000 level in 2026.

The 50-day and 200-day SMAs also point to continued upward movement. The immediate resistance is at $4,800 level, and it still seems likely to break out above $4,800. Moreover the RSI is rebounding from the mid-level in January 2026, which indicates continued upside momentum in gold.

The 4-hour chart for spot gold shows that the price has formed a bottom at the support of the ascending triangle pattern at $4,360. After reaching $4,360, the price has formed an inverted head-and-shoulders pattern and spiked above $4,600 level. The consolidation above $4,600 indicates the continuation of upward momentum this week.

Silver Technical Analysis

Silver is approaching the short term target of $90 to $100 level. However, the continued geopolitical tensions in the Middle East suggest that silver will likely continue to go higher in the coming weeks.

A break above the $100 level will bring the larger prospect of a surge to the $300 level in the silver market. The formation of an ascending broadening wedge pattern points to heavy volatility and higher price ranges.

The 4-hour chart for spot silver also shows the formation of an ascending broadening wedge pattern, whereby a breakout above the $100 level will open the door for much higher levels in the silver market.

The price action within the ascending broadening wedge pattern is still bullish pattern, which is supported by formation of inverted head and shoulders patterns and a symmetrical broadening wedge pattern. As long as the $70 support level holds, the next move in the silver market may be a break above the $100 level.

US Dollar Technical Analysis

The US Dollar Index is now trying to break above the 200-day SMA at 99.20 level. However, the price action is still in the neutral zone of 96.50 – 100.50. A break in either of these levels will be the deciding factor for the next move in US Dollar Index.

A break above 100.50 will be bullish with the 102 level as the target. However, a break below 96.50 will open the door for a move towards the 90 level.

The 4-hour chart for the USD Index shows strong consolidation between the 96.50 and 100.50 levels. As long as this sideways range holds, the next move in the USD Index is uncertain.