Gold (XAUUSD) and Silver Surge on Fed Rate Cut Bets and Geopolitical Tensions

Gold (XAUUSD) prices consolidate near the record high as markets brace for further Fed rate cuts and rising geopolitical tensions. The price corrected from its record high of $3,791 but remains strong above $3,750. The expectations of lower interest rates and continued safe-haven demand keep the precious metal in a bullish trend.

Fed Chair Jerome Powell’s recent comments have reinforced expectations of a more accommodative policy. The market now sees high odds of two more rate cuts by year-end. Moreover, U.S. Treasury yields remain weak, making gold an attractive investment option for investors amid uncertainty about inflation and sluggish job growth.

However, the upcoming PCE inflation data could influence gold’s next move. A stronger-than-expected report may push the U.S. Dollar higher, putting pressure on gold prices. However, if the inflation data support a dovish outlook, gold could resume its uptrend. In addition, rising geopolitical risks involving Russia and NATO further support gold’s role as a hedge in uncertain times.

Gold Technical Analysis

XAUUSD Daily Chart – Bullish Trend

The daily chart for spot gold indicates a breakout from the ascending triangle pattern, occurring near the $3,500 region. This breakout triggered a strong upward surge. At the time of the breakout, the RSI was above 70, signalling overbought conditions.

Despite this, the price continued to rise, ignoring typical overbought warnings. A pullback toward the $3,600–$3,500 region could help neutralise these conditions. Any correction would likely offer a strong buying opportunity for investors.

Additionally, the 50-day SMA remains above the 200-day SMA, and both averages are trending upward. This alignment confirms the continuation of a strong bullish trend.

The daily chart below shows that the price is moving toward the $4,000 target, as projected by the ascending broadening wedge pattern. If the price reaches this level, a short-term correction may follow.

XAUUSD 4-Hour Chart – Positive Price Development

The 4-hour chart for spot gold shows a breakout above the $3,700 level after a period of consolidation within a bullish channel. This breakout has opened the door for further upside momentum in the coming weeks. The $3,700 level now acts as support, while a break below it could lead to a decline toward the $3,500–$3,600 support zone.

Silver Technical Analysis

XAGUSD Daily Chart – Strong Bullish Momentum

The daily chart for spot silver (XAG) indicates that prices have reached a strong level of resistance at $44.10. The RSI remains extremely overbought, suggesting a potential price correction from this level. Strong support lies near the $41 area, where silver continues to trade within a strong bullish trend.

This trend is confirmed by the positive price action following the breakout from the Adam and Eve pattern above the $35 region. Any correction in silver prices is likely to offer a new buying opportunity for the next move higher.

XAGUSD 4-Hour Chart – Positive Price Development

The 4-hour chart for spot silver shows that the price has reached strong resistance near the $44.50 area, as defined by the upper boundary of the ascending broadening wedge pattern. The price is pulling back from this level and appears to be consolidating before its next move.

The emergence of an inverted head and shoulders pattern above the $35 support region signals bullish price action. Any correction in silver prices is likely to offer a buying opportunity for the next move higher.

US Dollar Index Technical Analysis

US Dollar Daily – Reversal after Fed Rate Cuts

The daily chart for the USD Index shows that the index rebounded from long-term support near the 96 level following the Fed rate cuts. It has now reached the 50-day SMA and faces strong resistance. As long as the index remains below the 98 level, the next move is likely to be lower. However, a break above 98 could trigger further upside toward the 100.50 level. The RSI remains below the mid-level, indicating negative price action and suggesting further downside.

US Dollar 4-Hour Chart – Negative Price Action

The 4-hour chart for the US Dollar Index shows that the index has been consolidating between the 96.50 and 98.60 levels. However, the price action indicates negative momentum. A break below 96.50 could trigger further downside toward the 90 level, while a break above 98.60 may lead the index toward the 100.50 level.