Gold, Silver, USD/JPY Technical Analysis as Election Uncertainty Looms

The US election is scheduled for November 5, generating significant market uncertainty. This uncertainty supports gold (XAU) prices in the near term. Historically, gold acts as a safe-haven asset during political and economic instability. The growing concerns over fiscal deficits, geopolitical tensions, and monetary easing policies have driven investors to use gold for protection. Recently, the gold price hit the minor resistance area of $2,760 and started to correct lower.

The increase in gold production from mining and higher recycling levels are expected to increase supply. Additionally, gold demand from jewellery and coins has declined due to high prices, reducing physical demand in the market. On the other hand, the silver (XAG) market remains strong after breaking $32.50. This breakout has taken the silver prices to the resistance zone around $34.80. Silver continues to be in demand in the industrial sector, driven by technological innovations and energy needs.

While gold is poised to benefit from election uncertainty, escalating geopolitical crises fuel its bullish momentum. On the other hand, the U.S. dollar index has shown a mild correction, which has pushed the USD/JPY rally downward. Growing uncertainty around the US election has strengthened the US dollar as a safe-haven asset in October. Meanwhile, investors are uncertain about another potential rate hike by the Bank of Japan (BoJ) following slightly dovish comments from Governor Kazuo Ueda.

Gold (XAU) Technical Analysis

Gold Daily Chart – Consolidation

The daily charts show a key reversal from the strong resistance at $2,760. The red-dotted trendline on the daily chart identifies this resistance. The price consolidation after producing the key reversal. Additionally, the RSI shows a bearish divergence on the daily chart, signalling potential weakness. Strong support lies at the 20-day SMA at $2,680. However, the short-term trend remains bullish, and any price correction will likely be supported at these levels. The uncertainty from the US election and the escalating geopolitical crisis may lift gold prices in the short term.

Gold 4-Hour Chart – Consolidation within Uptrend

The 4-hour chart for gold shows the formation of an ascending channel, with the price hitting the resistance zone at $2,760. The channel’s upper boundary defines this resistance and suggests that the price may fluctuate around this level. However, a break above $2,760 would likely continue the advance toward $2,780.

Silver Technical Analysis

Silver Daily Chart – Descending Broadening Wedge

The daily chart shows the breakout of descending broadening wedge patterns and inverted head and shoulders patterns at $32.50. The price has since hit resistance at $34.80 after the breakout. It is now correcting lower towards the breakout zone at $32.50. The 20-day SMA further strengthens this support and creates a solid support region. This correction is also driven by the overbought condition indicated by the RSI.

Silver 4-Hour Chart – Short-Term Correction

The 4-hour chart shows silver has broken out of the inverted head and shoulders pattern and surged higher. However, the RSI indicates extreme overbought conditions, and the price is now correcting lower toward the breakout region. Silver’s short-term trend remains bullish despite this correction, with $32.50 as a strong support.

USD/JPY Technical Analysis

USD/JPY Daily Chart – Breaks above 200 SMA

The daily chart for USD/JPY shows a strong rebound from the long-term support region of $140-$141. The price continues to advance higher after this support. The price has closed above the 200 SMA, indicating positive price action. Additionally, the 50 SMA is tilting upward, suggesting price strength. However, the RSI shows the pair is in a short-term overbought zone, signalling a potential price correction.

USD/JPY 4-Hour Chart – Ascending Broadening Wedge

The 4-hour chart shows that the rebound in USD/JPY from the long-term support at $140 has formed an ascending broadening wedge pattern. The price has been moving within this pattern for the past month. An ascending channel has also formed within the pattern, indicating strong support with $151.40 and $151.55. As the recent correction is due to the highly overbought conditions on the 4-hour chart, the price will likely remain volatile due to U.S. election uncertainty.