Gold (XAUUSD) and Silver Technical Analysis: Momentum Builds Ahead of Fed Rate Decision

Gold (XAUUSD) prices are consolidating near record highs as investors await the Federal Reserve’s rate decision this week. The price remains strong above $3,640, and the current weakness in the U.S. Dollar Index indicates continued upside. Despite strong momentum last week, traders are cautious ahead of the Fed’s signal on future rate cuts. The expected 25-basis-point cut is priced in, but uncertainty around the Fed’s forward guidance may limit near-term upside in gold.

However, the broader outlook remains bullish. Low interest rates, rising inflation, and political pressure on the Fed continue to support gold. Speculative positions have cooled slightly, which reduces the risk of an overbought correction. If the Fed confirms a dovish stance, gold could break above last week’s high and retest the $3,700 zone. A clear signal for more cuts in Q4 would accelerate momentum toward the $4,000 target.

Gold Technical Analysis

XAUUSD Daily Chart – Breakout from $3,500

The daily chart for spot gold shows strong bullish momentum after breaking above the $3,500 region. The recent consolidation since 9 September indicates that the price is preparing for another surge in the coming days. The primary target for this breakout remains the $4,000 level, which aligns with the ascending broadening wedge pattern’s upper trendline.

As long as key support between the $3,450–$3,500 zone holds, gold is likely to continue its upward move toward $4,000 in the next few weeks. Moreover, the 50-day SMA remains above the 200-day SMA, confirming a strong bullish trend. The 50-day SMA is now approaching the $3,500 region, which will act as a critical support level for the next leg higher in the gold market.

XAUUSD 4-Hour Chart – Bull Flag

The 4-hour chart for spot gold also shows strong bullish price action following 9 September, as the price formed a bull flag pattern near record levels. The breakout above $3,500 confirms strong bullish momentum. The consolidation in the form of a bull flag suggests that spot gold prices are likely to continue higher in the near term.

The recent pause in momentum is due to overbought conditions on the 4-hour chart, which are now easing as the RSI approaches the mid-level. A break above $3,674 will likely trigger another surge in gold prices.

Silver Technical Analysis

XAGUSD Daily Chart – Strong Bullish Momentum

Spot silver (XAG) also shows a strong bullish continuation, as highlighted by the daily chart below. Prices formed an inverted head-and-shoulders pattern in August and September 2024, followed by an Adam and Eve pattern in the first and second quarters of 2025.

After breaking out above the $35 level from the Adam and Eve pattern, silver continued to rally, forming a bullish hammer candle at the 50-day SMA. This price action signals a strong upside move in the coming weeks. Silver has already reached the $42–$43 target zone, but the continued bullish setup suggests prices are likely to break higher toward the $50 region.

XAGUSD 4-Hour Chart – Positive Price Development

The 4-hour chart for spot silver also shows strong bullish price action within an ascending broadening wedge pattern, targeting the $43 region in the short term. It also highlights an inverted head-and-shoulders pattern, with a breakout above the $39.40 level. As long as the $40 support holds, spot silver prices are likely to continue higher in the near term towards $43 to $44.

US Dollar Index Technical Analysis

US Dollar Daily – Bear Flag

The daily chart for the US Dollar Index shows that the index has broken below the bear flag pattern and retested it. The index is now consolidating below the 50-day SMA. This consolidation after the breakout indicates strong bearish pressure and suggests a significant drop ahead.

A break below the 96 level will likely trigger a sharp decline toward lower support levels. Moreover, rising expectations of a Fed rate cut in September could accelerate the downside move.

US Dollar 4-Hour Chart – Negative Consolidation

The 4-hour chart for the U.S. Dollar Index shows that the index has been consolidating between 97.20 and 98.60 over the past month. This week is pivotal for both the U.S. dollar and commodity markets, as the Fed is expected to announce its interest rate decision. If a rate cut is confirmed, the US dollar will likely trigger negative sentiment and downside pressure.