Gold (XAUUSD) and Silver Technical Analysis: Bullish Setup Builds Ahead of US CPI Data

Gold (XAU/USD) rebounds from the intraday low of $3,300 following encouraging US-China trade talks in London, which have lifted market sentiment and boosted equities. As risk appetite grows, some investors are shifting away from safe havens, limiting gold’s upside. However, geopolitical risks continue to support gold’s bullish momentum.

The market is now awaiting the US CPI data due on Wednesday, which could influence gold’s next move. The CPI is expected to rise from 2.3% to 2.5% year-over-year, while core inflation is projected to increase from 2.8% to 2.9%. If inflation exceeds expectations, the Fed may delay rate cuts, which could put pressure on the gold market.

The US Dollar Index has recovered to 99.07 after consolidating above the 98 support region over the past few days. Despite the dollar’s strength, Treasury yields remain flat, with the 10-year yield holding at 4.474% and real yields at 2.16%. These stable yields help gold maintain support, even as the dollar slightly strengthens. Meanwhile, the chart below shows that the NFIB Optimism Index rose to 98.8 in May, indicating an improvement in small business confidence.

Moreover, geopolitical tensions continue to support gold demand. President Trump’s warning about Iran’s nuclear stance and Russia’s claims in Ukraine’s eastern region maintain a risk premium in gold. If tensions escalate, gold could break above the $3,400 level. However, the CPI release remains the key driver of short-term price direction.

Gold Technical Analysis

XAUUSD Daily Chart – Bullish Setup

The daily chart for spot gold indicates that the price is consolidating within a descending channel, suggesting a bullish trend. The correction from the $3,400 region has found strong support at the black dotted trendline, which is located above the 50-day SMA.

The market is awaiting the CPI data, which will drive the next momentum in gold prices. A break above the 3400 level is required for further upside towards the $3500 region.

XAUUSD 4-Hour Chart – Constructive Rebound

The 4-hour chart for spot gold indicates that the price has found support at the black dotted trendline and is continuing to move upward. Strong resistance lies in the $3,410–$3,430 zone, and a break above $3,430 will likely trigger strong momentum toward the $3,500 level. The appearance of an inverted head and shoulders pattern, with the neckline at $3,230, indicates a strong bullish trend.

Silver Technical Analysis

XAGUSD Daily Chart – Inside Bar within Bullish Momentum

The daily chart for silver (XAGUSD) shows strong bullish momentum following the breakout from the $35 region. This positive price development followed consolidation between $33.60 and $31.70, and the breakout above $35 signals the start of a substantial price surge.

Tuesday’s daily candle formed an inside bar, indicating that a break above $36.85 could trigger a strong move toward the $38 level. However, the daily RSI is in the overbought region.

XAGUSD 4-Hour Chart – Bullish Momentum

The 4-hour chart for spot silver shows that the price has broken above $34.50 and remains in a strong upward trend. The RSI is consolidating in the overbought region, suggesting a potential correction toward the $35 area, which could trigger another upward move. However, the short-term price action remains firmly bullish, indicating further upside despite the overbought conditions.

US Dollar Index Technical Analysis

US Dollar Daily – Consolidation at Support

The daily chart for the US Dollar Index indicates that the index is consolidating around the long-term support zone, located near the 98 level. Despite a rebound from 98, the overall trend remains bearish, as indicated by a bearish head and shoulders pattern and a strong downward trend below the 50-day SMA. A rebound from this area is likely to trigger another corrective move in the US Dollar Index.

US Dollar 4-Hour Chart – Descending Channel

The 4-hour chart for the US Dollar Index shows that the index is trading within a descending channel and has found resistance at 100.50. A failure to break above this level may trigger another decline toward the 96 area. The index is consolidating in the short term and is awaiting a clear direction. The release of CPI data will be a key driver of the next momentum in the US Dollar Index.