Gold, Silver, US Dollar Technical Analysis: Market Awaits NFP Data for Direction

The US Dollar Index (DXY) remains strong ahead of the release of the first US Nonfarm Payrolls data. Rising global yields, fueled by concerns over President-elect Donald Trump’s inflationary policies, have widened rate differentials between the US and other countries. This divergence has bolstered the US Dollar while increasing volatility in foreign bond markets.

The recent spike in US bond yields, with the 10-year benchmark reaching a nine-month high of 4.728%, has pressured gold (XAU) prices. The market now awaits the release of Nonfarm Payrolls and unemployment data for further direction. The chart below highlights fluctuations in US Nonfarm Payrolls and the unemployment rate over time. The chart shows an increase in the unemployment rate since 2023, signalling a potential cooling in the labour market.

These trends suggest challenges for the US economy in sustaining robust job growth. A weaker labour market could dampen consumer spending and slow economic activity, potentially weighing on the US Dollar. Market expectations forecast a 154,000 increase in Nonfarm Payrolls, following November’s rise of 227,000. Moreover, geopolitical tensions, such as the Russia-Ukraine conflict and unrest in the Middle East, add further complexity to the market.

Gold (XAU) Technical Analysis

Gold Daily Chart – Ascending Broadening Wedge

The daily gold chart shows the price rebounding from the support level of an ascending broadening wedge pattern. The price remains within a bullish trend, suggesting potential for further upside. Additionally, the price has formed a symmetrical triangle within this pattern, indicating a continuation of the positive trend. With the release of the NFP data on Friday, strong resistance is seen at $2,720, which must be cleared for a meaningful rally to begin. On the downside, the price must break below $2,550 to signal further bearish momentum.

Gold 4-Hour Chart – Symmetrical Triangle

The 4-hour gold chart shows the price trading within a symmetrical triangle and challenging resistance around $2,675. A break above $2,675 could extend the upward trend toward $2,720. On the other hand, a break below $2580 is required for further downside.

Silver (XAG) Technical Analysis

Silver Daily Chart – Falling Wedge Pattern

The daily silver (XAG) chart shows a falling wedge pattern formation, typically considered a bullish signal. The price has closed above the 200-day SMA and is consolidating near the resistance of the falling wedge. Additionally, the price has formed a double bottom at the wedge’s support level, highlighting its bullish potential.

Silver 4-hour Chart – Descending Trendline

The 4-hour silver chart shows resistance at the descending trendline around $30.80. The formation of a double bottom and a break above $29.60 have paved the way for potential moves toward $30.80 and $32.50 levels. The upcoming Friday NFP data will be crucial in determining the silver market’s next direction. A break below $28.80 would negate the bullish momentum.

US Dollar Index (DXY) Technical Analysis

US Dollar Daily Chart – Bullish Momentum

The daily chart for the US Dollar Index shows that it is trending higher above the key level of 109. The index is currently breaking above 109 and appears strong ahead of the jobs data release. The 50-day SMA remains above the 200-day SMA, and the index is trading above both SMAs, indicating a strong bullish trend. The key support level for the index remains at 107.

US Dollar 4-Hour Chart – Ascending Channel

The 4-hour chart for the US Dollar Index shows that the index is trading within an ascending channel and continues to move higher. It has formed an inverted head and shoulders pattern within the ascending channel, indicating bullish momentum. Moreover, a break above 109.40 could pave the way for a move toward 111.