Gold, Silver, US Dollar Technical Analysis: Breakouts and Key Targets

The US Dollar Index (DXY) experienced significant volatility following President Donald Trump’s tariff-related announcements. The index initially rose to 108.79 but reversed as market sentiment turned risk-averse. Trump mentioned potential tariffs, including a 25% levy on imports from Canada and Mexico, which pressured the Canadian Dollar and Mexican Peso, increasing market uncertainty. Additionally, US Treasury yields dropped sharply, with the 10-year Treasury note yield falling to 4.573%, signaling a shift toward safer assets. Expectations of a steady Federal Reserve policy and the possibility of a future rate cut further contribute to a mixed outlook for the US Dollar.

Gold (XAU) experienced a sharp rally and broke the key level of $2,720. Investors turned to the safe-haven metal as Trump’s remarks heightened fears of trade conflicts. The drop in US Treasury yields and a weaker US Dollar provided additional support for gold prices. Meanwhile, escalating tensions in the Middle East further enhanced gold’s appeal. Israeli operations in Jenin and Hamas’s call for intensified fighting contributed to rising geopolitical uncertainty, strengthening gold’s safe-haven status.

On the other hand, silver (XAG) followed gold’s upward trajectory, gaining momentum amid increasing demand for safe assets. Falling yields, a weaker Dollar, and geopolitical instability provided a supportive environment for both precious metals. The unemployment claims data, flash manufacturing and services PMI, and housing data will be the key economic indicators to watch this week.

Gold (XAU) Technical Analysis

Gold Daily Chart – Breakout

The daily chart for gold shows that the price has broken above the $2,720 level, initiating a strong upward move. This breakout has allowed gold to approach and potentially break record levels. The RSI is currently hovering around 66, indicating further upside potential. Moreover, the 50-day and 200-day SMAs point to a strong bullish trend. A break above $2,790 could pave the way for a move toward the $2,900 to $3,000 zone. This target range is calculated based on the resistance level of the ascending channel.

Gold 4-Hour Chart – Bullish Price Action

The 4-hour chart for gold shows that the price has formed a bullish price action and broken above the $2,720 level. This bullish trend is validated by the observation that each price correction has led to a strong upward move. Furthermore, each correction has formed a bottom near the mid-level of the RSI, indicating that the price is likely to continue moving higher.

Silver (XAG) Technical Analysis

Silver Daily Chart – Preparation for Rally

Despite the strong move in the gold market, the silver market has not moved as strongly. However, the recent price consolidation suggests that silver is preparing for its next significant move. The emergence of a bullish hammer on Monday, followed by a strong daily gain on Tuesday, indicates that silver is poised for an upward move. The double bottom formation at the bull-bear line further strengthens the bullish outlook.

Silver 4-hour Chart – Descending trendline

The bullish formation in silver is also evident on the 4-hour chart. The price has broken above the descending trendline at $30.70 and shows upward momentum. However, the immediate resistance lies around $32.50.  A break above this level could lead to $34.80.

US Dollar Index (DXY) Technical Analysis

US Dollar Daily Chart – Correction

The strong rally in gold is driven by the significant correction in the US Dollar, as shown in the daily chart of the US Dollar Index below. The index has begun to retreat from its peak. However, the RSI has broken below the mid-level, indicating the potential for further correction in the US Dollar Index.

US Dollar 4-Hour Chart – Ascending Broadening Wedge

The correction in the US Dollar Index has broken the ascending broadening wedge pattern, suggesting a potential drop to 107.60. The emergence of the ascending broadening wedge highlights strong volatility. President Trump’s speech on Thursday will provide further guidance on the index’s next movement.