Gold (XAUUSD) and Silver (XAGUSD) Rebound from Key Support as US Dollar Weakens

Gold (XAUUSD) prices rise after bouncing from strong support, as the US Dollar weakens from key resistance. The decline in the US Dollar Index (DXY) below 100 reflects growing investor concerns about US fiscal health. Last week’s downgrade by Moody’s from AAA to Aa1 added further pressure, highlighting increasing debt risks. As a result, demand for safe-haven assets like gold has strengthened.

On the other hand, US Treasury yields (TNX) also rose, with the 10-year yield reaching 4.47%. Rising yields would typically pressure gold prices; however, uncertainty around Fed policy and US debt has kept gold supported. Despite hawkish remarks from Fed officials like Raphael Bostic and Alberto Musalem, the lack of clear guidance on rate cuts has created confusion, which has benefited gold.

Moreover, global monetary easing further supports the gold prices. The People’s Bank of China (PBoC) cut its rate, and the Reserve Bank of Australia (RBA) reduced its Cash Rate from 4.10% to 3.85%. These moves weakened the respective currencies and added bullish momentum to gold. On the other hand, the political instability in Ukraine and rising tensions in the Middle East also boosted the safe-haven demand for gold.

Gold (XAU) Technical Analysis

Gold Daily Chart – Rebound from Key Support

The daily chart for gold shows that the price has formed a bullish hammer at the 50-day SMA. After forming the hammer, the price consolidated above the 50-day SMA and broke above the $3,200 level. The strong rebound from the 50-day SMA indicates bullish momentum. Additionally, the RSI is rebounding from the midline, highlighting positive development.

Gold 4-Hour Chart – Inverted Head and Shoulders

The 4-hour chart for gold shows that the price has formed an inverted head and shoulders pattern and then broke above the $3,200 level. The strong bullish momentum following the rebound from the black trendline indicates upward trend and reinforces positive momentum.

Silver (XAG) Technical Analysis

Silver Daily Chart – Positive Price Development

The daily chart for silver (XAG) shows strong positive price development. During the consolidation from late April into May, the price remained above the 50-day and 200-day SMAs, indicating bullish momentum toward the $35 level. Moreover, the RSI is consolidating above 50, which reflects sustained positive momentum.

Silver 4-Hour Chart – Key Support

The 4-hour chart for silver also shows bullish price development, as each dip has bottomed near the $31.80 level and triggered a rebound. This suggests the price is building momentum for the next strong rally. Strong resistance lies around the $34.50 area, and a breakout above this level would signal a continuation of bullish momentum.

US Dollar (DXY) Technical Analysis

US Dollar Daily – Bearish Pressure

The daily chart for the US Dollar Index shows strong bearish pressure, highlighted by an inverted head and shoulders pattern. The price rebounded from 98 to 102 at the 50-day SMA before a sharp downward trend was initiated. The drop below the 100.65 level confirms continued bearish pressure, and the index will likely decline toward the 96 area.

US Dollar 4-Hour Chart – Descending Channel

The 4-hour chart for the US Dollar Index also shows strong bearish pressure as the index trades within a descending channel. It recently hit resistance at the 101.60 level, which aligns with the upper boundary of the channel and the 50-day SMA on the daily chart. The index is now trending downward and appears poised for further downside.