Gold, Silver, US Dollar Technical Analysis: US PPI Data Fuels Volatility

The US Dollar Index (DXY) shows strength despite mixed economic signals from the United States. Producer Price Index (PPI) data exceeded expectations, with a 3% year-over-year increase, suggesting potential inflationary pressures. However, the sharp rise in initial jobless claims to 242,000 signalled a cooling labour market. This divergence left traders uncertain about the Federal Reserve’s next move, though markets largely priced in a 25-basis-point rate cut at the upcoming meeting. After the data release, the DXY attempts to break the 107 resistance level, putting pressure on gold (XAU) and silver (XAG) prices.

Gold prices declined sharply on Thursday, snapping a four-day winning streak. The mixed economic data created uncertainty, particularly stronger-than-expected PPI figures and softer jobless claims. Spot gold fell to $2,680, with traders booking profits ahead of the Federal Reserve’s decision. A rebound in the US 10-year Treasury yield after the PPI data further pressured the precious metal. Market focus remains on the Fed’s next move, as a rate cut could support gold prices.

Similarly, silver encountered resistance at $32.20 ahead of the US PPI data release and declined following the announcement. The higher PPI data and increased jobless claims weighed on sentiment, keeping silver’s movement subdued. However, a breakout above $32.50 could signal renewed bullish momentum, with targets near $34.80. Gold and silver markets await next week’s Federal Reserve meeting, which will likely set the tone for future price action.

Gold (XAU) Technical Analysis

Gold Daily Chart – Consolidation

The daily chart for gold shows that the price has consolidated after a peak was formed in October. This consolidation reached strong support at the red-dotted trend line at $2,540, initiating a strong rebound. The price has since been consolidating within tight ranges as December approaches. From a seasonal point of view, December is typically a range-bound month for the gold market. However, the price remains above the 50-day and 200-day SMAs, indicating a positive direction once the consolidation phase is complete.

Gold 4-Hour Chart – Price Ranges

This consolidation is also observed on the 4-hour chart for gold. The price has been consolidating between $2,615 and $2,665. A break above $2,665 pushed the price to $2,720. After reaching this level, the price corrected back toward $2,665. The RSI also indicates that the price remains within the range.

Silver (DXY) Technical Analysis

Silver Daily Chart – Ascending Channel

The daily chart for silver shows that the price has been trading within an ascending channel over the past year. The price has been declining after peaking at the resistance level of this channel at $34.80. Last week’s price consolidation formed a bottom at the support of this channel, but Thursday’s PPI data release caused a significant drop in silver’s price, pushing it below the 50-day SMA. This decline indicates that the price remains within a consolidation phase as it searches for its next direction.

Silver 4-hour Chart – Descending Broadening Wedge

The 4-hour chart for silver shows that the price has been trading within a descending broadening wedge pattern. Silver failed to break above this wedge pattern at the $32.20–$32.50 resistance zone and started declining after the US PPI data release. A break below $29.60 could trigger further downside in silver. Conversely, a break above $32.50 would likely continue the upside move toward $34.80.

US Dollar Technical Analysis

US Dollar Daily Chart – Rebound from 105.60

The daily chart for the US Dollar Index shows that it has found support at the red trend line at 105.60 and rebounded to the 107 resistance level. A break above 108 could initiate an upward trend in the index. The 50-day SMA crosses above the 200-day SMA, indicating a bullish trend. Additionally, the rebound from 105.60 is supported by the midline of the RSI, suggesting potential for further upside.

US Dollar 4-Hour Chart – Double Bottom at Ascending Channel

The 4-hour chart for the US Dollar Index shows support at the lower boundary of the ascending channel at 105.60, confirmed by a double-bottom formation. The index is currently testing resistance at the blue-dotted trend line. A breakout above this trend line could trigger an upward move. If the index surpasses 108, it will likely advance toward the channel’s resistance at 109.40.