Gold, Silver, US Dollar Technical Analysis: Geopolitical Tensions Drive Safe-Haven Demand

The US dollar (DXY) corrects lower from the 107 resistance level following a strong rally after the US election. Despite a recent correction, the US dollar remains supported by expectations of a less dovish Federal Reserve. The high US Treasury yields, stemming from inflationary pressures and expectations of tighter fiscal policies, continue to strengthen the currency. However, geopolitical risks, such as the Russia-Ukraine war and tensions in the Middle East, have increased market uncertainty. These events have limited the upside potential of the US dollar, redirecting some investor focus to safe-haven assets.

Gold (XAU) and silver (XAG) markets are highly sensitive to geopolitical developments. Russia’s changes in nuclear policy have raised fears of nuclear escalation. Additionally, Ukraine’s use of US-supplied ballistic missiles has intensified safe-haven demand for gold, pushing prices to $2,640, a clear reflection of investor risk aversion. Meanwhile, silver has also rebounded from support and is following the bullish momentum.

The release of unemployment claims data on Thursday and manufacturing and services PMI data on Friday are expected to further influence market sentiment for the US dollar, gold, and silver. Gold and silver will likely remain key assets for risk-averse investors during the geopolitical crisis.

Gold (XAU) Technical Analysis

Gold Daily Chart – Pivotal Support

The daily chart for gold shows that the price has been trading within an ascending channel for the past 15 months. The price tends to rebound higher whenever it touches the 100-day SMA within this channel. Notable examples include the November 13, 2023, and February 14, 2024 rebounds, as visible on the chart. The recent correction in gold prices from the record high of $2,790 also tested the 100-day SMA and bounced higher.

This time, the 100-day SMA intersected with a black trendline and the ascending broadening wedge supports. This convergence marked a strong pivotal region for spot gold. A decisive break above the 50-day SMA around $2656 could trigger the next upward move, potentially retesting the record highs.

Gold 4-Hour Chart – Inverted Head and Shoulders

The 4-hour chart indicates that the market low was $2,526, followed by a price rebound. This rebound was accompanied by a period of strong consolidation, which led to a significant move toward the $2,540 resistance area. Since the RSI on the 4-hour chart has remained oversold for an extended period, the rebound is likely to persist. As gold approaches the $2,540 resistance level, the market is expected to consolidate in this region. Geopolitical tensions may continue to support the gold market in the short term.

Silver (DXY) Technical Analysis

Silver Daily Chart – Price Rebound from Support

The daily silver chart indicates that the price correction from $34.80 has reached the targeted support area of the descending broadening wedge pattern. This support lies in the $29.80 to $30.20 region. The low in spot silver before the strong rebound was $29.66, which initiated a significant recovery.

The emergence of inverted head-and-shoulders patterns during the second and third quarters of 2024 indicates a bullish trend. This suggests that the price will likely increase once the correction is complete. A break above the 50 SMA at $31.70 is expected to support the upward price movement further.

Silver 4-hour Chart – Descending Broadening Wedge

The 4-hour chart shows that the correction was completed within the support area of the descending broadening wedge pattern. The strong rebound from this region indicates price strength and the continuation of upward momentum. Furthermore, forming an inverted head-and-shoulder pattern supporting the descending broadening wedge suggests a bottoming process. This highlights the potential for an upward surge once a break above $32 occurs.

US Dollar Technical Analysis

US Dollar Daily Chart – Correction from Resistance

The daily chart for the US dollar index shows that the price has begun a correction from the strong resistance at 107. The support for this correction lies at the red trendline around 105.60. The index remains within a broader consolidation range between 100 and 107, with a decisive breakout likely to occur soon. The ongoing geopolitical conflicts in Ukraine are expected to impact the US dollar, contributing to price uncertainty.

US Dollar 4-Hour Chart – Ascending Channel

The 4-hour chart shows that the US dollar index has encountered resistance at the ascending channel and has begun consolidating. The immediate support for this correction lies in the 105.60 to 105.20 area.