Gold (XAU/USD) Analysis:
Gold reached a record high of $3,578.50 but recently retreated towards the $3,500 level, marking a typical profit-taking pause before continuing its ascent. The recent increase in U.S. Initial Jobless Claims, combined with ongoing global risks, is supporting gold demand, alongside expectations for a potential Federal Reserve rate cut.
Gold Technical Analysis:
- Breakout from Ascending Triangle: The breakout above the $3,500 mark follows a four-month consolidation period, signaling that the price is likely to continue rising. However, short-term overbought conditions, as indicated by the RSI, suggest that the metal may need to correct before resuming its upward trajectory.
- Support Levels: Gold now has strong support between $3,450 and $3,500. If prices stay above these levels, bullish momentum will likely persist. A correction back toward the $3,500 zone is possible before the next surge.
- Near-Term Outlook: After the correction, gold is expected to resume its upward trend, potentially reaching new heights as Fed rate cut bets increase.
Silver (XAG/USD) Analysis:
Silver has also followed gold’s bullish lead, breaking through significant resistance levels. The recent breakout above $39.40 suggests further upside potential, with targets in the $42–$43 range.
Silver Technical Analysis:
- Breakout Above $39.40: Silver prices have moved strongly above the $39.40 resistance level, supported by bullish patterns like inverted head and shoulders.
- Support Levels: The 50-day SMA and previous support levels around $35–$36 continue to hold. A possible correction is expected due to overbought conditions, but longer-term momentum remains positive.
- Target Levels: Silver is aiming toward the $42–$43 region as the next significant resistance level. Short-term consolidation may occur before this next surge.
US Dollar Index Analysis:
The U.S. Dollar Index is facing headwinds as it forms a bear flag pattern. This reflects uncertainty in the U.S. currency, which may be further influenced by Friday’s Nonfarm Payrolls data.
USD Technical Analysis:
- Bear Flag Pattern: The daily chart indicates a bearish flag pattern, and the index is consolidating near support. This suggests that the dollar may continue to weaken in the near term, benefiting precious metals.
- Resistance and Support: A break above $100.50 would change the outlook for the dollar, potentially leading it toward the $102 level. However, as long as the dollar remains below this resistance, the bearish sentiment will persist.
Market Outlook:
With the anticipation of potential rate cuts from the Federal Reserve, and continued geopolitical and economic uncertainties, both gold and silver appear poised for further gains. Traders will be closely watching the upcoming Nonfarm Payrolls data, which could play a pivotal role in determining the future direction for both metals and the U.S. Dollar.
Key Focus for Traders:
- Nonfarm Payrolls Data: This report could trigger further momentum for gold and silver if the data supports expectations of a Fed rate cut.
- Geopolitical and Fiscal Risks: Ongoing trade tensions, Fed independence concerns, and global market risks will continue to support safe-haven demand for precious metals.
The broader bullish trend remains intact for both gold and silver, with short-term pullbacks likely providing buying opportunities for traders.
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