Gold, Silver, US Dollar Technical Analysis – Market Reacts to Geopolitical Tensions

The US dollar index dropped on Friday after hitting the critical resistance at $103.90. The housing sector also showed signs of weakening, with the latest data revealing a drop in building permits and housing starts. Building permits were reduced to 1.428 million, down from 1.47 million in August. On the other hand, housing starts slipped to 1.354 million from 1.61 million. Despite these indications of a potential slowdown in the housing market, broader economic indicators demonstrate strength.

Meanwhile, gold (XAU) and silver (XAG) breached the $2,700 and $32.50 marks, respectively. This movement was driven by uncertainty surrounding the US election and tensions in the Middle East. These factors weighed on US Treasury bond yields and the US dollar on Friday. The solid weekly close for gold and silver indicates significant price gains for both metals. The US dollar’s reversal from key resistance levels supports this upward momentum. The US existing home sales data on Wednesday and manufacturing and services PMI data on Thursday will further influence the markets.

Gold (XAU) Technical Analysis

Gold Daily Chart – Upward Pressure

Gold surged last week after breaking out from the descending broadening wedge pattern. The weekly and daily closes were strong, signalling the potential for further upside next week. The price action shows upward solid momentum despite the overbought conditions indicated by the RSI. The breakout from the descending broadening wedge pattern opens the door for a target range of $2,900 to $3,000.

Gold 4-Hour Chart – Price Nears Target of $2,750

The 4-hour chart shows a highly overbought region indicated by the RSI. However, the price is poised to reach resistance in the $2,750 region. This resistance is measured by the trendline of the ascending channel. The break of the descending broadening wedge pattern targets the $2,750 on the 4-hour chart.

Silver Technical Analysis

Silver Daily Chart – Breaks Key Level of $32.50

The Silver daily chart shows a strong surge on Friday after consolidating within the ascending channel. The break of the $32.50 level keeps the inverted head and shoulders pattern intact. This breakout targets the $34.40 level, as measured by the black dotted trendline. A break above $34.40 will likely lead to the $35-$36 price zone. The escalation of geopolitical crises is expected to sustain increased demand for silver.

Silver 4-Hour Chart – Breakout from Inverted Head and Shoulders

Silver has formed a solid bullish pattern on the 4-hour chart with an inverted head and shoulders. The break above $32.50 also confirmed the inverted head and shoulders on the 4-hour chart. This initiated a solid move, with the price closing the week at $33.715. However, the 4-hour chart shows overbought conditions as indicated by the RSI. A price correction back to $32.50 may ignite another strong move higher.

US Dollar (DXY) Technical Analysis

US Dollar Daily Chart – Correction from Key Resistance

The US dollar hit the 103.90 resistance and corrected lower toward the black trendline at 103.20. This key resistance level coincides with the intersection of the 200 SMA and the red trendline. It represents a critical resistance that must be broken for further upside. The upcoming election and geopolitical uncertainties are keeping the dollar in a volatile range.

US Dollar 4-Hour Chart – Correction after Bearish Divergence

The US dollar index corrects lower following the bearish divergence on the 4-hour chart. The support zone lies between the 103.30 and 103.10 levels. This support is also visible on the daily chart with the black trend line.