Gold (XAUUSD) and Silver Technical Analysis: Rally Builds as Fed Rate Cuts Support Metals

The Federal Reserve cut its benchmark rate by 25 basis points, bringing the target range to 4.0%–4.25%. Chair Jerome Powell balanced political pressure with market expectations. One of the FOMC members dissented, calling for a deeper 50 basis-point cut. This shift signals a more dovish tilt while maintaining credibility with investors.

On the other hand, economic data show a slowing U.S. economy. Job gains have softened, and the unemployment rate is rising. Moreover, inflation remains elevated at 3.0%, well above the Fed’s 2.0% long-term target. Slower growth and sticky inflation create a supportive backdrop for gold.

Financial conditions remain loose. The chart below shows that the Chicago Fed’s NFCI dropped to -0.558, indicating ample liquidity.

Moreover, U.S. Treasury yields show a downward trend. Powell is walking a fine line between Trump’s push for stimulus and the market’s demand for stability. A deeper rate cut could trigger a bond selloff, while resisting cuts might provoke political backlash. This uncertainty supports a bullish outlook for gold. Investors may turn to gold as both a hedge against inflation and a shield from rising political risks.

Gold Technical Analysis

XAUUSD Daily Chart – Bullish Consolidation

The daily chart for spot gold shows that the price has been consolidating within an ascending channel near record levels after hitting resistance around the $3,700 region. The pullback from this resistance presents the next buying opportunity, with $4,000 as the next target.

The strong support remains between the $3,500 and $3,600 region. A correction toward this zone presents a compelling entry point for long-term investors.

XAUUSD 4-Hour Chart – Positive Consolidation

The 4-hour chart for spot gold shows a key reversal from the support of the ascending channel at $3,640. This rebound is likely to push gold prices toward the $3,700 region. Moreover, the RSI is turning higher, indicating renewed bullish momentum in spot gold.

Silver Technical Analysis

XAGUSD Daily Chart – Strong Bullish Momentum

The daily chart for spot silver shows that the price corrected following the U.S. interest rate decision. However, the market had largely priced in the rate cuts, and the correction found strong support to resume its upward trend.

As long as silver holds above $40, the next move is likely to be higher. The key resistance remains at the $44 region, and a breakout above this level would likely trigger a strong rally toward the $50 area.

XAGUSD 4-Hour Chart – Positive Price Development

The 4-hour chart for spot silver shows that the price is trading within an ascending broadening wedge pattern and has found strong support near the lower boundary at $40.90.

A rebound from this support is likely to push silver prices toward the resistance zone near the $44 area. The bullish price structure over the past year, including the formation of an inverted head and shoulders pattern, suggests that silver prices are likely to continue higher.

US Dollar Index Technical Analysis

US Dollar Daily – Reversal after Fed Rate Cuts

The daily chart for the US Dollar Index shows that it has broken below the bear flag pattern and continues to move lower. However, the index reversed from the long-term support at 96.50 following less dovish comments by the Federal Reserve. Despite this rebound, the overall price action remains bearish, and the recovery is likely to face resistance, leading to another potential decline in the index.

US Dollar 4-Hour Chart – Negative Price Action

The 4-hour chart for the US Dollar Index shows that it is oscillating between 96.50 and 98, with overall negative price action. Although the rebound from 96.50 was strong, the continued trading below 100.50 signals persistent bearish momentum. A decisive break below 96.50 would likely trigger a sharp decline toward the 90 level.