Gold, Bond Yield, US Dollar Technical Analysis: Gold Eyes $3,000 as US Dollar Weakens

Gold (XAU) prices are approaching record levels as the US Dollar Index (DXY) declines sharply, driven by economic uncertainties. These uncertainties stem from President Trump’s remarks at the World Economic Forum (WEF), hinting at lower interest rates and softening his stance on Chinese tariffs. The weakening dollar has increased gold’s appeal as a hedge, pushing prices sharply higher toward record levels.

In addition, strong US economic data released on Friday further supported the upward momentum in the gold market. December’s manufacturing activity improved while existing home sales rose 2.2% monthly. These data points signal resilience in key sectors of the economy despite broader uncertainty.

The chart below highlights a three-month trend of improving home sales, indicating significant growth in the housing sector. This recovery reinforces confidence in certain areas of the economy, which drives gold prices higher, combined with a weaker dollar.

Moreover, the Global Manufacturing PMI improved to 50.1, signaling growth, while the Services PMI fell below expectations. The University of Michigan’s final Consumer Sentiment for January declined to 71.1. This mixed economic data reflects market uncertainty, which continues to drive demand for gold.

The US dollar remains under pressure as traders focus on key upcoming data, including Durable Goods Orders, GDP figures, and the Core Personal Consumption Expenditures (PCE) Price Index. The Federal Reserve’s upcoming interest rate decision could further shape the dollar’s trajectory. Markets anticipate two rate cuts by the end of 2025, with the first expected in June. This dovish outlook and geopolitical and economic uncertainties suggest continued bullish momentum for gold.

Gold (XAU) Technical Analysis

Gold Daily Chart – Ascending Broadening Wedge

The daily chart for gold shows that the price has broken above $2,720 and is consolidating near record levels. A breakout above the $2,790–$2,800 range could push gold prices toward the $3,000 region. This target is derived from the ascending broadening wedge trend line. Additionally, the rising RSI indicates continuing the upward trend in gold prices.

Gold 4-Hour Chart – Ascending Channel

The 4-hour chart shows that the price has encountered resistance at the ascending channel and is poised for a correction. This correction is expected to set the stage for another advance. The RSI suggests that gold may consolidate further before breaking higher.

Treasury Yields (TNX) Technical Analysis

10-Year Treasury Note Yield Daily Chart – Inverted Head and Shoulders

The daily chart for US Treasury yields shows that yields are consolidating around the long-term resistance area of 4.60%–4.70%. A breakout from the 1-year trend line and the formation of an inverted head-and-shoulders pattern are likely to support further increment in yields.

10-Year Treasury Note Yield 4-Hour Chart – Ascending Channel Pattern

The 4-hour chart for US Treasury yields shows that yields are trading within an ascending channel, indicating bullish momentum. The current correction, which began at the 4.80% resistance level, could set the stage for another advance toward 5%. The strong support lies at 4.40%.

US Dollar (DXY) Technical Analysis

UD Dollar Daily – Consolidation and Correction

The daily chart for the US Dollar Index shows that the index has dropped to the strong support level of 107 and is rebounding higher. This support aligns with the 50-day SMA. A break below this level could push the index further down toward 105.60. Additionally, the RSI has broken below the midpoint, indicating the potential for continued downward momentum.

US Dollar 4-Hour Chart – Ascending Broadening Wedge

The 4-hour chart for the US Dollar Index shows that it has broken out of the ascending broadening wedge pattern, subsequently dropping toward the 107 level. Notably, this breakout highlights significant volatility in the US dollar market. Furthermore, the index rebounded from the oversold region as it approached the support level. However, a recovery above the 109 level could ultimately signal that the correction is complete.