Gold (XAUUSD) and Silver Technical Analysis: Fed Pivot Signals Further Upside

Gold (XAU) and silver (XAG) are gaining attention as markets react to shifting economic conditions. Safe-haven demand is strengthening while policy expectations continue to evolve. This article presents an outlook on how these forces are shaping the next move in gold and silver prices.

Gold and Silver Rise as Jobs Data Signals Fed Pivot

The weak ADP employment report supports a positive outlook for gold and silver prices. The chart below shows the economy lost 32,000 jobs in November, marking the first negative 3-month average since August 2020.

Job losses were concentrated among small firms, which continue to face pressure from tariffs and other economic factors. The added strain during the holiday season has further impacted many of these businesses.

This combination of job weakness and tariff stress reinforces concerns about a recession. As a result, demand for safe-haven assets, such as gold and silver, remains high.

Moreover, the markets expect a 25-basis-point Fed rate cut on December 10. The odds of a cut have surged to 89%, and 13-week T-Bill yields have dropped below the current fed funds target. The lower interest rates weaken the dollar and reduce the opportunity cost of holding non-yielding assets. This has sparked renewed interest in buying both gold and silver.

Despite weak jobs data, some parts of the economy remain firm. The chart below shows that the ISM Services PMI increased to 52.6%.

Moreover, financial conditions remain loose, with the Chicago Fed’s index at -0.522. However, these signs of resilience may only delay further easing, not prevent it. Precious metals continue to benefit as investors anticipate a broader Fed pivot.

Gold Technical Analysis

The daily chart for spot gold shows that the price is consolidating around the $4,200 region after breaking out of a symmetrical triangle pattern. Gold remains within an ascending broadening wedge, and a break above the $4,260 could trigger a move toward the $4,380 resistance area.

A decisive breakout above $4,380 would likely continue the strong bullish surge in gold prices. While seasonal consolidation is expected in December due to holidays, this is likely to impact only short-term trading activity.

Despite the current pause, the broader trend in gold remains strongly bullish. A confirmed move above $4,380 would pave the way for an advance toward the $5,000 region in the coming weeks.

Silver Technical Analysis

Silver prices are pulling back after reaching a new high at $58.90. However, this move is seen as a short-term consolidation, with silver preparing for the next leg higher.

The formation of a cup-and-handle pattern above the $45 region signals a bullish setup. The breakout above $54.50 has opened the door for a potential move toward the $62 area.

A sustained break above $59 would confirm strength and likely trigger a rally toward much higher price levels.

US Dollar Technical Analysis

The daily chart for the US Dollar Index shows that it failed to break above the 100.50 level and continues to move lower. The breakdown below the 50-day SMA, followed by a breach of the 99 level, has opened the door for further downside in the coming days.

The next short-term support lies near the 98 level. A decisive break below 98 is likely to trigger a move toward the 96.50 area. The RSI remains below the midline, signalling continued bearish momentum in the near term.

Conclusion

In conclusion, gold and silver remain well-positioned for further gains as weakening job data, rising recession risks, and growing expectations of a Fed rate cut drive safe-haven demand. While some economic indicators show resilience, they are unlikely to prevent policy easing.

From a technical perspective, both metals show bullish formations, with gold poised to break above $4,380 and silver targeting a move beyond $59. Meanwhile, the continued decline in the US Dollar Index reinforces the bullish backdrop for precious metals in the weeks ahead.