The global economic environment continues to fluctuate, influenced by moderating inflation, geopolitical risks, and shifts in monetary policy. With inflation hovering around 3% and the Federal Reserve reducing interest rates by 1% from the 2024 peak, the economic outlook remains mixed. However, escalating geopolitical tensions, particularly in energy markets, could once again stoke inflationary pressures, adding volatility to the commodities and currency markets. This volatility could affect the prices of safe-haven assets like gold and silver.
The chart below shows inflation data trending upwards, particularly driven by energy price increases. Despite some easing in core inflation, concerns remain about inflation reaccelerating due to rising energy prices and ongoing economic recoveries in major global markets, including China, Europe, and the US. Geopolitical events such as US sanctions on Russian oil have already pushed energy prices higher, creating an environment conducive to rising gold and silver prices.
In this context, gold is likely to continue being a favored safe-haven asset. Moreover, the Fed’s ongoing liquidity tightening and its massive reduction in securities holdings ($2 trillion) could add stress to financial markets and make gold even more attractive.
Gold (XAU) Technical Analysis
Gold Daily Chart – Ascending Broadening Wedge
Gold is trading within an ascending broadening wedge pattern. The price has recently rebounded from the $2,580 support level and is now facing a key resistance point at $2,720. A break above $2,720 is critical for gold to initiate a new upward trend. This resistance level has proven tough in recent sessions, and a decisive breakout would signal a potential rally towards new highs.
Gold 4-Hour Chart – Symmetrical Triangle
The 4-hour chart shows a consolidation phase after gold reached $2,720. A breakout from the symmetrical triangle pattern has been bullish, but for the price to sustain its upward momentum, it needs to surpass the $2,720 resistance. Until then, gold remains in a range-bound phase, waiting for direction.
Silver (XAG) Technical Analysis
Silver Daily Chart – Falling Wedge Pattern
Silver is trading within a falling wedge pattern, signaling potential bullish momentum if the price can break upward. The price remains above the 200-day SMA, which offers support, and the RSI is holding above 50, suggesting an underlying positive price action. However, silver has yet to break the pattern’s apex, leaving room for further consolidation.
Silver 4-Hour Chart – Descending Trendline
Silver faced resistance at $30.70 last week and is now consolidating below this level. As long as silver remains below $32.50, it may continue its consolidation. A breakout above $32.50 would be a strong signal for further upside toward the $34.80 level, signaling that silver could join gold in an upward trend if conditions remain favorable.
US Dollar Index (DXY) Technical Analysis
US Dollar Daily Chart – Bullish Momentum
The US Dollar Index (DXY) has shown bullish momentum, with a strong rebound initiated last Friday. The 50-day SMA is still above the 200-day SMA, confirming a positive momentum for the dollar. The Friday candle formed a reversal pattern, signaling a continuation of the dollar’s upward trend. The index is supported by the Federal Reserve’s monetary policy decisions, which continue to affect its performance.
US Dollar 4-Hour Chart – Ascending Channel
The US Dollar Index is trading within an ascending channel, indicating bullish price action. Support is holding strong at the 108.80 and 109 levels, with the index rebounding from these levels and pushing higher. If this support holds, the DXY could reach the next key resistance at 111.90, reinforcing the dollar’s bullish trend.
Conclusion
Gold: Watch the $2,720 resistance level closely. A breakout above this could signal a continuation of the uptrend, possibly targeting new highs.
Silver: Monitor the $32.50 level for a breakout to the upside. If silver can surpass this resistance, $34.80 could be the next target.
US Dollar: The DXY remains in a bullish trend with strong support at 108.80 and 109. A sustained rebound from these levels could see the dollar testing the 111.90 level.
As market volatility continues, especially driven by energy price fluctuations and inflationary pressures, these levels will provide crucial signals for traders and investors navigating the uncertain terrain in 2025.
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