Gold prices have surpassed the critical $3,400 mark, and silver prices have found support at $35.40, both metals poised to continue their upward momentum amid growing geopolitical tensions.
Gold’s rally extended for the third consecutive day as expectations for a rate cut by the U.S. Federal Reserve gained traction. Soft inflation data and jobless claims surpassing 240,000 suggest a slowdown in economic activity, raising the likelihood of the Fed acting to support growth. This has bolstered demand for safe-haven assets like gold, pushing its price toward the $3,500 level.
Meanwhile, the U.S. Dollar Index has fallen to 98, marking a three-year low, and the 10-year Treasury yield has dropped to 4.367%. Real yields also declined to 2.097%, providing further support for gold and silver. In addition, slower-than-expected inflation, as indicated by May’s Producer Price Index rising just 0.1%, strengthens the case for potential monetary easing, maintaining a bullish outlook for gold.
Geopolitical concerns are also playing a key role in gold’s price surge. Rising tensions, including reports of a possible Israeli military strike on Iran, have heightened the demand for safe-haven assets. With markets pricing in 51 basis points of Fed rate cuts by the end of the year, gold is likely to remain a popular investment in the coming weeks.
In terms of technical analysis, the daily chart for gold (XAUUSD) shows a price rebound from the 50-day moving average (SMA), pushing through the $3,400 level. The price remains above both the 50-day and 200-day SMAs, signaling strong bullish momentum. The relative strength index (RSI) is also rebounding from the mid-level, suggesting a potential bottom. A move above $3,500 could lead to a further increase toward the $3,750 area.
The 4-hour chart for gold displays a bullish price action, highlighted by an inverted head and shoulders pattern with the neckline at $3,230. Gold is currently testing resistance in the $3,410–$3,430 range. A breakout above this level could push the price toward $3,500, with bullish momentum likely to continue as long as the price stays above the $3,230–$3,300 range.
For silver (XAGUSD), the daily chart shows a positive price structure, with consolidation between $30.15 and $33.60 forming a solid foundation. A breakout above $35 has triggered a surge, although overbought conditions, as indicated by the RSI, suggest a possible pullback. Nevertheless, silver has found strong support at $35.40, and this level may prompt another rally.
The 4-hour chart for silver reveals a correction from the $36.80 resistance, with prices finding strong support at $35.40. This pullback is attributed to the overbought conditions in the short-term chart. If silver breaks above $36.80, it could see another sharp rise.
On the other hand, the U.S. Dollar Index (DXY) is showing signs of bearish pressure. The daily chart indicates a potential breakdown below the 98 level, with the emergence of a bearish head and shoulders pattern signaling further downward momentum. A move below 98 could see the index drop toward 96. The RSI below the mid-level further confirms the bearish outlook.
The 4-hour chart for the U.S. Dollar Index highlights a descending channel, suggesting continued downward pressure as long as the index stays below 100.50. However, the RSI has reached oversold conditions, which could lead to a short-term rebound, potentially offering another selling opportunity for the dollar.
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