Gold, Silver, US Dollar Technical Analysis As Gold-Silver Ratio Nears Pivotal Zone

The US Dollar Index (DXY) continues to trade higher on New Year’s Eve, crossing above the 108.50 mark. This bullish momentum follows a period of consolidation during the Christmas holidays. The strong performance of the US dollar is driven by hawkish comments from the Federal Reserve during its December meeting. Persistent inflation and robust labor market data have influenced the Fed’s cautious stance on rate cuts in 2025. Strong Treasury yields in October, November, and December have further supported the US Dollar Index, limiting the upside potential for gold (XAU) and silver (XAG) prices.

Gold gained significantly in 2024, but the Federal Reserve’s policy decisions and seasonal tendencies limited its momentum in December. Most of the upward movement in gold prices during the year was driven by geopolitical tensions in the Middle East, which spurred safe-haven demand. Investors remain cautious about potential changes under the incoming Trump administration, as trade policies and risk sentiment could shift dramatically. Meanwhile, ongoing geopolitical tensions, including the Russia-Ukraine conflict and instability in the Middle East, continue to support gold’s safe-haven appeal.

Silver Struggles as Gold/Silver Ratio Nears Pivotal Zone

Silver remains weak in December, consolidating below the key $29.60 level. Despite gold’s strong performance in 2024, silver’s gains were limited as the gold/silver (XAU-XAG) ratio fluctuated between 90 and 75 throughout the year. The ratio failed to break below the 70 level, which restricted silver’s price growth.

Moreover, the gold/silver ratio attempts to trade higher than the 90 level, putting additional downward pressure on silver prices. The weekly chart for the gold/silver ratio shows that it is trading in the 90–92 zone and appears strong. A breakout above this pivotal zone in the gold/silver ratio could indicate that gold is gaining strength relative to silver.

Gold (XAU) Technical Analysis

Gold Daily Chart – Symmetrical Triangle

The daily chart for gold shows that the price consolidates with the support of a symmetrical triangle and exhibits positive price action. This positive movement aligns with the support provided by the 100-day SMA. Moreover, the RSI remains neutral, indicating a lack of strong directional momentum, while the price holds above the red-dotted trendline, maintaining the bullish trend. The strength in the gold/silver ratio keeps the gold momentum strong.

Gold 4-Hour Chart – Positive Price Action

The symmetrical triangle is also evident on the 4-hour chart, where the price is showing positive price action around its support. The key level to watch is $2,630, and a breakout above this level could trigger a short-term upward move. Conversely, a break below $2,580 may extend the downside momentum in the gold market.

Silver (XAG) Technical Analysis

Silver Daily Chart – Bearish Momentum

The daily chart for silver shows that the price has broken below the 200-day SMA as the gold-to-silver ratio attempts to break above 92. The RSI is currently around 34, indicating the potential for further downside in silver prices. The next support level in the silver market lies at the black-dotted trendline in the $27 to $28 zone. A recovery above $29.60 will indicate a positive momentum.

Silver 4-hour Chart – Descending Broadening Wedge

The 4-hour chart for silver shows that the price is trading within a descending broadening wedge pattern. Silver has failed to break above $29.60 and continues its downward momentum as the gold/silver ratio strengthens. The next short-term support lies in the $27.80 to $28 range, where a rebound is anticipated.

US Dollar Technical Analysis

US Dollar Daily Chart – New Year Rally

The daily chart for the US Dollar Index shows that it continues to rise following the formation of bullish price patterns. The emergence of a bullish hammer at the 105.60 support level indicates ongoing strength in the US dollar. Additionally, the crossover of the 50-day SMA above the 200-day SMA confirms a strong bullish trend.

US Dollar 4-Hour Chart – Ascending Channel

The 4-hour chart for the US Dollar Index shows that it has formed an inverted head-and-shoulders pattern within an ascending channel. These bullish patterns developed at the support level of 105.60. This was followed by a breakout above 107, initiating a new leg of higher prices in the index. The US Dollar rally targets 110.50.