Gold and Silver Technical Analysis: Bullish Trends Amid Inflation and Fed Policy

Gold (XAU) prices continue to rise after rebounding from the $2,865 support level. This rebound followed the release of the U.S. Consumer Price Index (CPI) data, which showed that inflation remains above the Federal Reserve’s 2% target, as shown in the chart below. Meanwhile, the prospect of a peace deal between the U.S. and Russia has not weakened confidence in gold. This indicates that, despite geopolitical developments, traders prioritize economic uncertainty. Consequently, the strong demand for gold reflects ongoing concerns about inflation and the Fed’s monetary policy stance.

Moreover, Federal Reserve Chairman Jerome Powell’s testimony reinforced the likelihood of interest rates remaining steady for longer. Markets initially reacted to the hotter-than-expected CPI print by pushing up bond yields. However, gold’s continued rally raises questions about whether rising yields coexist with strong gold demand.

Traditionally, higher yields weaken gold, but persistent inflation concerns may drive investors to hedge with bullion. The CME FedWatch tool now shows a higher probability that rates will remain unchanged through June, strengthening gold prices.

On the other hand, the broader geopolitical landscape also influences gold’s momentum. Tensions surrounding Ukraine and NATO discussions weigh on risk assets, weakening the U.S. dollar. A weaker dollar generally boosts gold, making it more attractive to foreign investors.

Additionally, U.S. President Donald Trump’s hostage ultimatum adds further uncertainty, increasing demand for safe-haven assets. With inflationary pressures remaining strong and global tensions persisting, gold’s bullish trend will likely remain.

Gold (XAU) Technical Analysis

Gold Daily Chart – Bullish Hammer

The daily chart for gold shows that the price is trading within an ascending broadening wedge pattern, which signals bullish momentum. Notably, a bullish hammer reversed the bearish hammer on Wednesday after releasing the U.S. CPI data. However, gold must break above $2,942 to initiate the next move higher.

The green dotted trendline at $2,795 remains a key support level for gold. The price is still in a strong uptrend, reinforcing the bullish outlook. However, the Relative Strength Index (RSI) indicates extreme overbought conditions, which could signal a potential pullback or consolidation before the next upward move.

Gold 4-Hour Chart – Immediate Trend

The 4-hour chart for gold shows the formation of multiple ascending channels. The price has entered an immediate uptrend, as seen in ascending channel 2. The price correction after the U.S. CPI release tested the support of this channel, and the rebound from this level indicates the continuation of another upward move.

Silver (XAG) Technical Analysis

Silver Daily Chart – Positive Price Action

The daily chart for silver (XAG) shows that the price is consolidating around $32.50, increasing the possibility of an upward breakout. The positive price movement above the bull-bear line suggests that silver is poised to advance. Moreover, the price remains above the 50-day and 200-day SMAs, both of which are rising, confirming a bullish trend.

Silver 4-Hour Chart – Positive Development

The 4-hour chart for silver shows that the price is consolidating around the key $32.50 level. As a result, this consolidation strengthens the bullish case for silver. If this trend continues, a breakout above $32.50 could potentially push the price toward $34.80.

US Dollar (DXY) Technical Analysis

UD Dollar Daily – Negative Price Action

The daily chart for the U.S. Dollar Index shows that the price is weakening above the 107 zone, increasing the possibility of a downward breakout below 107. Furthermore, the price consolidation within the volatile zone suggests that the index could eventually break lower toward the 105.60 level.

US Dollar 4-Hour Chart – Ascending Broadening Wedge

The 4-hour chart shows the formation of an ascending broadening wedge pattern. The price consolidation within this wedge highlights weakness. If the U.S. dollar fails to break above 110, the likelihood of a downside breakout will increase further.