Gold, Bond Yield, US Dollar Technical Analysis: Inflation, Politics and Market Volatility

The chart below shows that consumer sentiment dropped sharply in February 2025. This decline indicates growing economic uncertainty. Weaker sentiment signals reduced consumer spending, which slows economic growth. This can lead to lower interest rates as policymakers try to support the economy. Lower rates weaken the US Dollar, making gold (XAU) more attractive as an alternative store of value. The recent drop in the US Dollar Index reinforces this trend, increasing gold’s appeal for investors seeking stability.

On the other hand, inflation expectations have surged to 4.3%, raising concerns about purchasing power erosion, as shown in the chart below. When inflation rises, investors turn to gold as a hedge against a declining currency value. Gold prices are struggling at record levels but show strength and are looking for a further upside breakout. A breakout above $2,950 per ounce could trigger a rally toward $3,000. Rising inflation and a weakening Dollar create an environment where gold performs well. If inflation expectations remain elevated, gold demand will likely increase further.

Moreover, political uncertainty adds another layer of support for gold. The Trump administration’s return could unsettle markets and slow economic growth. A liquidity squeeze could trigger a correction, especially with US stocks trading at high valuations. A weakening Dollar and reduced Treasury inflows would further enhance gold’s attractiveness. Investors may turn to gold as a safe-haven asset if economic instability persists.

Key economic indicators will shape the market this week. US GDP data, consumer confidence, and the core PCE price index will directly impact the US Dollar and gold prices. Traders and investors should closely monitor these reports for potential market movements.

Gold (XAU) Technical Analysis

Gold Daily Chart – Thin Range

The daily chart for gold shows that the price has reached the orange zone of $2,900–$3,000 and is consolidating to stabilize at higher levels. Despite the strong resistance zone, the price has not dropped quickly. Instead, it is stabilizing for further gains. However, the overbought conditions observed using the RSI indicate that the price may correct lower before a strong move higher. If the price fails to break the $2,950–$3,000 zone and starts to correct lower, the $2,800 level will be a strong support.

Gold 4-Hour Chart – Broadening Wedge

The 4-hour chart for gold shows that the price has been consolidating in a narrow range at the resistance of $2,950. A break above this level will open the door for higher levels. However, a failure to break this resistance could trigger a strong correction toward the support of the broadening Wedge at $2,860.

Treasury Yields (TNX) Technical Analysis

10-Year Treasury Note Yield Daily Chart – Correction

The daily chart for Treasury yields shows that yields are dropping from the resistance of 4.70% and correcting lower toward 4.30%. The overall outlook for US Treasury yields remains bullish based on the formation of inverted heads and shoulders. However, a break below 4.30% may trigger another drop to 4.10%.

10-Year Treasury Note Yield Hourly Chart – Correction

The 4-hour chart for US Treasury yields shows that yields have broken from the ascending channel at 4.45% and are moving toward supporting the red trendline at 4.30%. A break below this level will keep US Treasury yields trending downward.

US Dollar (DXY) Technical Analysis

UD Dollar Daily – Consolidation and Correction

The daily chart for the US Dollar Index shows bearish pressure after a break below 107. This bearish pressure is evident as the index retested the 107 level after the breakout and continued lower. The immediate support after breaking below 107 remains at the 105.20 level. The 200-day SMA also reinforces this support.

US Dollar 4-Hour Chart – Falling Wedge Pattern

The 4-hour chart for the US Dollar Index shows that the index has broken the ascending broadening wedge pattern and remains within the falling wedge pattern. The consolidation within this wedge pattern indicates a bullish price action. A breakback above 107 will confirm a bullish reversal. However, a break below 105 will keep the US Dollar under strong bearish pressure.