Gold and Silver Technical Analysis: Trade Tensions and Cooling Inflation Drive Safe-Haven Demand

Gold (XAU) prices surged from $2,950 to $3,215, marking over a 5% gain since Tuesday. The key catalyst for this surge was President Trump’s 90-day pause on higher tariffs for 56 countries and the European Union, reverting them to a 10% baseline. This move reduced short-term economic uncertainty, which typically supports gold prices. As a result, investors rushed into gold as a safe haven, pushing the price sharply higher during the session.

Trump’s simultaneous tariff hike on China to 125%, combined with China’s planned 84% retaliation, renewed fears of escalating trade tensions. These tensions spurred a flight to safety, further supporting gold’s rise. The People’s Bank of China weakening the Yuan for the sixth straight session added to the pressure, as currency instability often drives demand for gold. With China likely using its currency as a bargaining chip, market uncertainty remains high, strengthening gold’s appeal.

Cooling Inflation and Rate Cut Bets Boost Gold Appeal

The shifting expectations around US interest rates are also influencing gold. The CME FedWatch tool now shows a 32.6% chance of a rate cut in May, down from 44.6% earlier in the week. However, June rate cut expectations are still high. Lower interest rates generally weaken the dollar and support gold prices. On the other hand, the US consumer price index (CPI) fell by 0.1% month-over-month in March 2025, as shown in the chart below. This drop followed a 0.2% rise in February and missed market expectations of a 0.1% increase. The decline came mainly from lower prices in airline fares, motor vehicle insurance, used cars and trucks, and recreation.

Moreover, inflation eased to 2.4% in March, yearly, down from 2.8% in February. This marks the second month of slowing inflation and the lowest annual rate since September. The data signals that price pressures in the US economy are cooling more than expected. This slowdown in inflation could support gold prices. Weaker inflation often shifts expectations toward looser monetary policy.

Gold (XAU) Technical Analysis

Gold Daily Chart – Parabolic Surge

The daily chart for gold shows that the price has broken the record levels at $3,167 and remains in surge mode. The strong price correction after Trump’s new tariff announcement on April 4th, followed by a 100% rally from the $2,950 support, indicates that gold will continue to surge. The RSI has picked up from the mid-level, indicating strong bullish momentum. The strong resistance lies within the $3,300 and $3,400 zones.

Gold 4-Hour Chart – Ascending Channel

The 4-hour chart below shows that gold has broken the ascending channel. The price has started a strong and quick rally from the support at $2,950, indicating strong bullish momentum.

Silver (XAG) Technical Analysis

Silver Daily Chart – Pivotal Support

The daily chart for silver (XAG) shows that the price has rebounded from the support zone of $27.00–$27.50. The low in spot silver was $27.97, where a bullish hammer formed at the support. Silver is now recovering above the 200-day SMA after the quick drop, indicating that the price is likely to continue higher.

Silver 4-Hour Chart – Rebound

The 4-hour chart for silver shows that the price has rebounded from the strong support at $28.70, as the target of the ascending broadening wedge pattern was achieved. Silver’s immediate resistance is $32.50; a break above this level will keep the bullish trend intact.

US Dollar (DXY) Technical Analysis

US Dollar Daily – Bearish Pressure

The daily chart for the US Dollar Index shows it remains under bearish pressure below 103.50 and breaks the 100.65 zone. A break below 100.65 keeps the US dollar uncertain and under strong bearish pressure.

US Dollar 4-Hour Chart – Descending Channel

The 4-hour chart for the US Dollar Index shows that it trades within a descending channel and remains under bearish pressure. The index has breached the descending channel and entered the next level of the channel. However, the ongoing bearish momentum suggests that the index may continue to drop further. This bearish pressure is adding bullish momentum in gold market.