Gold and silver prices extended their bullish run this week, breaking key resistance levels and signaling the potential for higher gains. With the U.S. Federal Reserve facing political pressure, a weakening U.S. dollar, and markets pricing in an imminent rate cut, the safe-haven metals continue to attract strong investor demand.
Gold Rally: Breakout Above $3,500 Sparks Momentum
Gold (XAU/USD) surged above the critical $3,500 resistance and marked a fresh record at $3,540, breaking free from a four-month consolidation phase. Historically, such extended consolidation patterns often precede significant breakouts, and this move suggests the next phase in gold’s long-term uptrend may already be underway.
The rally has been underpinned by:
- Federal Reserve concerns: Political challenges to the Fed’s independence have fueled uncertainty.
- Weakening U.S. dollar: Recent softness in the greenback has increased gold’s appeal.
- Global trade and tariff risks: Rising tensions continue to boost safe-haven flows.
Although U.S. ISM Manufacturing PMI slipped to 48.7, signaling contraction, a rebound in new orders helped cap the dollar’s losses and supported gold at higher levels.
Gold Technical Outlook
- Daily Chart: Gold broke decisively through $3,500, confirming a bullish continuation pattern. Analysts now see $3,700–$3,800 as the next potential upside zone.
- 4-Hour Chart: Price action highlights a clean breakout after months of consolidation. While short-term indicators are slightly overbought, dips toward $3,500 are likely to attract buyers.
Support now rests at $3,500, while the immediate upside target sits near $3,600.
Silver Surge: Breakout Reinforces Bullish Case
Silver (XAG/USD) has also joined the rally, climbing past $39.40 after weeks of consolidation. The metal is displaying bullish formations, including an inverted head and shoulders pattern, which typically signals trend continuation.
- Daily Chart: Silver confirmed its breakout above $35 and $39.40, turning those levels into new support. Immediate resistance is now seen in the $42–$43 range.
- 4-Hour Chart: The bullish pattern from June and August has gained momentum, reinforcing expectations for a move toward higher levels in the weeks ahead.
US Dollar Index: Bearish Signals Persist
The U.S. Dollar Index (DXY) continues to flash weakness despite a temporary rebound.
- Daily Outlook: A bear flag formation below 100.50 points to further downside risk. Unless the index reclaims this level, pressure remains tilted lower.
- 4-Hour Outlook: Sideways consolidation above 96.50 suggests indecision, but a break below 97 could accelerate declines toward 96.40.
A weaker dollar environment continues to provide tailwinds for both gold and silver.
Market Outlook: Eyes on Jobs Data and Fed Decisions
Markets are pricing in a 91% probability of a September rate cut, according to CME’s FedWatch tool. This makes upcoming Nonfarm Payrolls (NFP) data on Friday a critical catalyst. A weaker jobs report would reinforce the case for policy easing and likely push gold toward $3,600 and silver closer to $42–$43.
Until then, technical structures remain firmly bullish, and both metals look set for further gains as long as support levels hold.
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