Gold and Silver Build Positive Momentum as US Dollar Weakens – Key Levels to Watch

Gold (XAU) prices continue to rise on Tuesday as trade war fears drive safe-haven demand. Despite upbeat US job data, traders ignore the strong labor market and continue accumulating bullion. The latest US JOLTS report shows job openings rose to 7.740 million in January, surpassing expectations of 7.63 million, as shown in the chart below. However, concerns over an economic slowdown persist, with the Atlanta Fed GDP Now model predicting a -2.4% contraction for Q1 2025, the first negative print since the COVID-19 pandemic.

On the other hand, the US 10-year Treasury yield has recovered from the 4.10% support, rising to 4.282%. However, gold remains strong due to ongoing geopolitical tensions and central bank purchases. The People’s Bank of China (PBoC) added 10 tonnes of gold in the first two months of 2025, while Poland’s National Bank (NBP) made its largest purchase since 2019, increasing reserves by 29 tonnes. Despite rising yields, central bank demand continues to support gold prices.

Meanwhile, breaking news from Saudi Arabia indicated that Ukraine is willing to accept a ceasefire proposal. US Secretary of State Marco Rubio said the US must convince Russia to agree. This development could act as a headwind for gold, as geopolitical tensions have been a key driver of recent price gains. Traders now await key US inflation data, with the Consumer Price Index (CPI) due Wednesday and the Producer Price Index (PPI) on Thursday. These reports will shape expectations for Federal Reserve rate cuts, with money markets now pricing in 77.5 basis points of easing for 2025, up from 74 bps last Friday. Any deviation in inflation data could trigger sharp moves in gold and silver (XAG) markets.

Gold (XAU) Technical Analysis

Gold Daily Chart – Positive Reversal

The daily chart for gold shows that the price has reversed from the $2,880 support and formed a reversal candle. However, the price is still below the orange zone, a barrier to further advances. The strong key support remains at the $2,800 area. If the price stays above $2,800, another advance to $3,000 and $3,200 is likely.

Gold 4-Hour Chart – Inverted Head and Shoulders

The 4-hour chart for gold shows that the price has been consolidating within a symmetrical broadening wedge pattern, forming an inverted head and shoulders. The consolidation between $2,880 and $2,920 increases volatility in the gold market, and a break above $2,920 will indicate another surge in gold prices.

Silver (XAG) Technical Analysis

Silver Daily Chart – Positive Reversal above Key

The daily chart for silver shows that the price is forming bullish price action and building positive momentum above the key resistance of $32.50. This positive price action indicates a move to the $35 region. Once the correction is over, silver prices will likely rally to $35.

Silver 4-Hour Chart – Inverted Head and Shoulders

The 4-hour chart shows that the price forms an ascending broadening wedge pattern, breaking the black dotted trend line. This bullish inverted head and shoulders within the wedge indicate positive momentum toward $35.

US Dollar (DXY) Technical Analysis

UD Dollar Daily – Extreme Bearish Pressure

The daily chart for the US Dollar Index shows strong bearish pressure as the index breaks key levels and continues to drop despite oversold conditions. The index is now breaching 103.50, indicating a move toward the 100.65 support region.

US Dollar 4-Hour Chart – Bearish Pressure

The 4-hour chart further highlights the strong bearish pressure, as the index ignores the descending channel’s support. The RSI indicates extremely oversold conditions, and the continuation of the downtrend while ignoring a rebound creates a bullish divergence on the chart. However, the index may continue lower before a rebound occurs.