Gold (XAUUSD) and Silver (XAGUSD) Rebound as Weak US Data Lifts Fed Rate Cut Hopes

Gold (XAU) prices increased sharply as the weak US economic data renewed hopes for Federal Reserve rate cuts. The Producer Price Index (PPI) unexpectedly dropped by 0.5% in April, missing the 0.2% increase forecast. On the other hand, core PPI also dropped by 0.4%, below the expected 0.3% increase. This decline in factory gate inflation lowered bond yields and increased demand for gold. As a result, gold found a bottom within the support region of $3130 and formed a bullish hammer. The chart below shows that the US producer prices change has dropped to 2.4% in April 2025.

Moreover, the retail sales increased only 0.1% in April compared to 1.7% in March, as shown in the chart below. Tariffs weighed on consumer spending and signalled broader economic weakness.

Similarly, initial jobless claims held steady at 229,000, showing no improvement in the labour market. This mix of weak consumption and soft inflation strengthened expectations for monetary easing.

Gold (XAUUSD) Technical Analysis

Gold Daily Chart – Price Reversal

The daily chart for gold shows that the price has found support at the 50-day SMA and pushed higher. A bullish hammer has formed at the red-circled area, indicating that the short-term direction for gold remains upward. Despite this reversal, the RSI remains below the midpoint, suggesting continued price uncertainty. A break above $3,280 would confirm the continuation of the upward rally.

Gold 4-Hour Chart – Price Rebound

The 4-hour chart for gold shows that the price found support at the black trendline near the $3,130 area and reversed higher. This reversal occurred at a pivotal level where the ascending channel support was established. As long as the price remains above $3,100, gold is likely to trend higher.

Silver (XAGUSD) Technical Analysis

Silver Daily Chart – Resistance of 50-Day SMA

Despite gold’s strong rally to $3,500 followed by a sharp correction to the $3,100 zone, silver prices showed little reaction. However, the consolidation below the $35 level suggests a positive development. A break above $35 would signal a strong upside move. As long as the price remains above the 200-day SMA at $31.30, silver is likely to trade higher.

Silver 4-Hour Chart – Positive Development

The 4-hour chart for silver shows strong bullish price action, with the price holding above $31.80. The emergence of a double bottom pattern in April signals a strong bullish reversal. Additionally, the RSI is rebounding from a support level, indicating building bullish momentum.

US Dollar (DXY) Technical Analysis

US Dollar Daily – Bearish Pressure

The daily chart for the US Dollar Index shows that the index is consolidating after testing the 50-day SMA at 102. It failed to close below 100.65 and has entered a consolidation range between 102 and 100.65. A break below 100.30 would signal a continuation of the bearish trend. On the other hand, a break above 102 could push the index further toward the 103 level.

US Dollar 4-Hour Chart – Descending Channel

The 4-hour chart for the US Dollar Index shows the formation of a descending channel, with the index recently hitting the channel resistance near the 102 level. The RSI remains below the midpoint, indicating the continuation of a negative trend for the US Dollar Index. However, a break below 100.30 is required for the bears to gain full control.