Gold and silver prices are showing signs of renewed bullish momentum as investors await critical U.S. inflation data that could shape the Federal Reserve’s monetary policy path.
Gold (XAU/USD) Rebounds Amid Risk-On Sentiment
Spot gold (XAU/USD) bounced from an intraday low of $3,300 on Tuesday, buoyed by improved sentiment following encouraging progress in U.S.-China trade negotiations in London. The news sparked a broader risk-on move in equities, prompting some investors to rotate out of safe-haven assets and capping gold’s immediate upside.
Despite this, geopolitical tensions—particularly over Iran’s nuclear program and ongoing instability in Ukraine—continue to provide underlying support for the precious metal.
The focus now shifts to the release of the U.S. Consumer Price Index (CPI) report, scheduled for later Wednesday. Headline inflation is forecast to rise from 2.3% to 2.5% year-over-year, while core CPI is expected to edge higher from 2.8% to 2.9%. A hotter-than-expected reading could push the Federal Reserve to delay interest rate cuts, potentially weighing on gold in the short term.
Meanwhile, the U.S. Dollar Index has strengthened to 99.07 after finding support near the 98 level in recent sessions. Despite the firmer dollar, Treasury yields remain stable, with the 10-year yield holding at 4.474% and real yields at 2.16%—conditions that continue to support gold prices.
Adding to the positive backdrop, the NFIB Small Business Optimism Index rose to 98.8 in May, its highest level in several months, suggesting improving confidence among U.S. business owners.
Gold Technical Outlook: Bullish Patterns Taking Shape
Daily Chart:
Gold remains in a short-term corrective phase but is trading within a descending channel, suggesting a potential bullish breakout. The price has rebounded off a key trendline support above the 50-day Simple Moving Average (SMA), reinforcing the bullish setup. A confirmed breakout above the $3,400 level could open the door for a move toward the $3,500 region.
4-Hour Chart:
The shorter-term chart shows a constructive rebound, with prices respecting the same trendline support. Resistance is now forming in the $3,410–$3,430 area. A breakout above $3,430 would likely confirm a continuation of the rally toward $3,500. An inverted head-and-shoulders pattern, with a neckline at $3,230, further supports the bullish scenario.
Silver (XAG/USD) Eyes Fresh Highs Amid Strong Momentum
Silver prices (XAG/USD) are also exhibiting strong upside potential after breaking out of a recent consolidation range. The breakout above the $35 mark signals the beginning of a new leg higher following a prolonged consolidation between $33.60 and $31.70.
Tuesday’s inside bar candle pattern suggests that a move above $36.85 could spark further buying interest, potentially driving prices toward the $38 level. However, the daily Relative Strength Index (RSI) has entered overbought territory, which could lead to some near-term consolidation.
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