Gold, Silver, EUR/USD Technical Analysis After US Core PCE Inflation Data

The PCE inflation data revealed a slight decline in the headline inflation rate to 2.1% year-over-year in September, down from 2.2% in August. This decline aligned with market expectations. The PCE Price Index rose by 0.2%, as forecasted. Meanwhile, the core PCE Price Index stayed high at 2.7% yearly, just above the expected 2.6%. This data suggests that while headline inflation is easing, underlying inflationary pressures remain persistent. These persistent pressures could complicate the Federal Reserve’s future policy decisions. The US dollar index reacted negatively to the PCE data and dropped to 103.88. The report reinforced the expectation that the Fed might not need to tighten monetary policy further.

However, the labour market showed resilience, moderating concerns about the need for aggressive rate cuts. Strong ADP employment data on Wednesday painted a more favourable picture of the job market. This was further supported by lower-than-expected Initial Jobless Claims of 216,000 for the week ending October 25. This solid labour data reduces the urgency for the Fed to cut interest rates to support employment. The drop in the US dollar has resulted in a rebound in EUR/USD from the long-term support of $1.0790.

Moreover, the uncertainty surrounding the US election period affects gold (XAU) and silver (XAG). The release of PCE data has led to a strong correction in gold and silver from key resistance levels. The election outcome will further influence gold and silver, as either Donald Trump or Kamala Harris will introduce policy changes that may impact the commodity market.

Gold (XAU) Technical Analysis

Gold Daily Chart – Reversal from Resistance

The daily chart for gold shows a price correction from strong resistance. The red dotted trend line on the daily chart indicates this resistance. The key reversal on Thursday at the overbought region suggests that gold may correct lower. Strong support lies at $2,696 and $2,616, measured by the 20 and 50 SMAs.

Gold 4-Hour Chart – Correction from Ascending Channel Resistance

The 4-hour chart for gold shows that the price has peaked at the resistance of the ascending channel at $2,790. Bearish divergence was also observed on the 4-hour chart using the RSI, leading to a strong correction on Thursday. The 50 SMA on the daily chart intersects the support line of the ascending channel, which lies at the $2,696 level.

Silver (XAG) Technical Analysis

Silver Daily Chart – Correction from the $34.80 Resistance

The price corrects from the resistance at $34.80. The price is currently testing the support at $32.50, the neckline of an inverted head-and-shoulders pattern. This level of $32.50 was broken after six months of price consolidation, making the retest crucial. Moreover, the RSI is approaching the mid-level on the daily chart, indicating buying pressure in silver.

Silver 4-hour Chart – Descending Broadening Wedge

The 4-hour chart for silver shows that the price forms a descending broadening wedge pattern after the breakout of the $32.50 level. The price is retesting the support level, highlighting strong potential for a rebound. The RSI on the 4-hour chart also approaches the oversold level, indicating that the price may experience a rebound.

EUR/USD Technical Analysis

EUR/USD Daily Chart – Rebound from Strong Support

The pair rebounds from the strong support level of $1.0790 as the US dollar begins to correct from resistance. The pair is breaking the resistance at $1.0870, determined by the 200-day SMA. The RSI reverses from the oversold level and indicates that EUR/USD may continue to rise.

EUR/USD 4-Hour Chart – Double Bottom

The 4-hour chart shows that the price has rebounded from strong support, forming a double-bottom pattern. The pair is breaking the strong resistance at $1.0870, which serves as the neckline of the double-bottom pattern. A confirmed breakout above this level will confirm the bottom and could push the pair to higher levels. Conversely, a break below $1.0770 would signal a continuation of the downside.