Gold, Silver, US Dollar Technical Analysis Ahead of US Core PCE Data

The US dollar strengthened on Friday and attempted to break above the key level of 107. This positive price action was built after the robust US economic data, with Services PMIs exceeding expectations. However, mixed signals emerged as the Manufacturing PMI remained in contraction territory despite marginal improvement. Meanwhile, consumer sentiment improved, signaling cautious optimism about economic resilience. Despite these gains, traders reduced the likelihood of a Federal Reserve rate cut in December. This reflects ongoing uncertainty about inflation trends and the direction of monetary policy.

Gold (XAU) surged above $2,700 amid escalating geopolitical tensions, reaching a two-week high of $2,710. Its safe-haven appeal strengthened due to concerns over the Russia-Ukraine conflict and uncertainty in the Middle East. If the geopolitical tensions persist, gold may challenge its all-time high of $2,790. The Core PCE Index data will come out on Tuesday, shaping to be the week’s key event. It could trigger significant moves in both gold and the US dollar. It could trigger significant moves in both gold and the US dollar.

On the other hand, silver (XAG) follows gold’s upward momentum, buoyed by geopolitical concerns. As an industrial and precious metal, silver benefits from safe-haven demand and expectations of steady economic activity. Investors remain cautious, as the Federal Reserve’s upcoming decisions and inflation data will be crucial in shaping market sentiment. Gold and silver markets remain sensitive to geopolitical and economic developments. With inflation expectations easing slightly and real yields retreating, precious metals could maintain their appeal to risk-averse investors.

Gold (XAU) Technical Analysis

Gold Daily Chart – Pivotal Support

The daily chart for gold shows that the price is trading within an ascending channel. The formation of an ascending broadening wedge within this channel indicates strong bullish momentum. The price found support around the pivotal region of $2,560, which triggered another strong upward surge. The RSI has closed above the mid-level, signaling positive price action. Moreover, the target for gold remains in the $2,800 to $2,900 range, as defined by the ascending broadening wedge pattern.

Gold 4-Hour Chart – Bullish Momentum

The 4-hour chart for gold highlights strong support and a rebound from the $2,560 level. Additionally, the price broke above $2,709 by Friday’s close. The bullish momentum on the 4-hour chart suggests that prices may remain elevated. Escalating tensions between Russia and Ukraine further fuel this bullish momentum. However, the RSI is approaching the overbought region, indicating that a potential correction in gold prices could develop.

Silver (DXY) Technical Analysis

Silver Daily Chart – Positive Price Action

The daily chart for silver indicates that the price corrected and completed its move at the support level of a descending broadening wedge pattern. The rebound from this support appears strong and suggests higher prices. The RSI also turns upward, indicating that the next upward move has begun. However, a break below the $29 level would negate the immediate-term bullish momentum.

Silver 4-hour Chart – Descending Broadening Wedge

The 4-hour chart for silver reveals the emergence of a descending broadening wedge. The price has rebounded from the support, forming an inverted head-and-shoulders pattern. Immediate resistance is at $32, followed by $33. Last week’s price action also formed an inverted head-and-shoulders pattern, indicating bullish momentum in silver prices.

US Dollar Technical Analysis

US Dollar Daily Chart – Consolidation at Resistance

The daily chart for the US dollar shows that the Index attempted to break above 107. It is now approaching the resistance zone at 108.30. Since the level of 107 is a major level, the index may consolidate around this area before breaking higher. The confirmed breakout above 107 may mark a significant move for the US dollar index, as the index is consolidating within the 1-year range. Escalating tensions between Russia and Ukraine may increase volatility in the US dollar Index and broader markets.

US Dollar 4-Hour Chart – Ascending Channel

The 4-hour chart shows that the US dollar Index extended its move toward the 108 region last week. This week’s US PCE data will set the tone for the next move in the US dollar. The RSI suggests that a short-term pullback might develop.