Gold (XAUUSD) and Silver Technical Analysis: Price Correction Amid a Surge in Volatility

Gold (XAUUSD) prices dropped from key resistance levels as traders rushed to book profits after hitting record highs. The decline was anticipated, as discussed in the previous article. It marked the steepest daily drop in five years, driven by a wave of selling following months of steady gains.

Gold had rallied on safe-haven demand, central bank buying, and expectations of rate cuts, but the sharp volatility near the peak signaled exhaustion in the uptrend.

On the other hand, silver (XAGUSD) also suffered heavy losses, dragging down the entire precious metals complex. The metal failed to hold above key support near $50 and now faces volatile, sideways movement.

While short-term sentiment remains weak, silver’s long-term outlook depends on how gold stabilizes and how upcoming macro data, including the delayed CPI report, influences Federal Reserve policy expectations.

Gold Technical Analysis

XAUUSD Daily Chart – Volatility Surge

The daily chart for spot gold shows high volatility at the record levels above $4,000. The volatile region is defined by the ascending broadening wedge pattern, which was broken in October 2025. Following the breakout, gold surged to a high near $4,380 before retracing toward the $4,050 level, which now acts as a key mean support.

The correction was driven by extremely overbought conditions, as indicated by the RSI. Currently, the price is consolidating within this volatile region as the market searches for direction. A break below $3,950 would likely keep gold within the ascending wedge pattern and open the door for further downside. However, a break above $4,380 could trigger another rally toward the $4,600 level.

XAUUSD 4-Hour Chart – Ascending Broadening Wedge

The 4-hour chart for spot gold also shows the formation of an ascending broadening wedge pattern. The gold price formed a double bottom around the $4,380 level and then corrected sharply toward the $4,050 support area. This support area is defined by the wedge structure.

A break below $4,050 could trigger another decline toward the $3,950 to $4,000 region. However, a breakout above $4,380 would likely initiate a renewed surge toward the $4,600 level.

The recent correction was necessary, given the persistently overbought conditions since September 2025. The RSI has now returned to levels not seen since the previous period, suggesting that the gold market remains technically healthy.

Silver Technical Analysis

XAGUSD Daily Chart – Healthy Correction within Bull Market

The daily chart for spot silver shows signs of extreme exhaustion in the market, as indicated by the RSI. The recent correction from the $54 region down to the $48 level reflects a healthy pullback within a broader uptrend.

As the RSI stabilizes above the 50 or 30 level, silver is likely to find a bottom and prepare for the next strong move to the upside. As long as the price holds above the $43-$45 support region, the silver market is expected to resume its upward trajectory, with a potential target around the $60 area.

XAGUSD 4-Hour Chart – Key Support

The 4-hour chart for spot silver also shows the formation of an ascending broadening wedge pattern, with strong support in the $47 to $48 region. A break below the $47 level could trigger another decline toward the $45 area. However, a breakout above the $52 zone would likely generate strong bullish momentum in the silver market.

US Dollar Index Technical Analysis

US Dollar Daily – Consolidation

The daily chart for the U.S. Dollar Index shows strong consolidation between the 96 and 100 levels. The 100 level marks a key resistance zone, which aligns with the 200-day SMA near 100.50.

Although the index is consolidating within this range, the overall price structure remains bearish. This rebound in the U.S. Dollar Index is likely to be capped below the 200-day SMA and could lead to another downward move.

US Dollar 4-Hour Chart – Consolidation

The 4-hour chart for the US dollar index shows strong consolidation between the 96 and 99 levels. However, the index rebounded sharply from the 96 level following the Federal Reserve’s interest rate cuts. Despite this rebound, the overall price structure remains bearish, and the consolidation is likely to resolve to the downside. If the US dollar index breaks above the 100.50 level, it may trigger further upside toward the 102 region.