XAU/USD
The recent geopolitical events surrounding de-dollarization have put the dollar’s dominance to the test. Russia and China have agreed to trade oil in the Chinese Yuan, which will likely have a heavy bearing on the price of gold but in a positive light.
Ahead of the US General Elections, the risks are mounting that the economy will remain resilient. With the backdrop of the Ukraine-Russia conflict, this could mean higher geopolitical tensions.
According to FXStreet, the longer the war continues, the longer countries not affiliated with the West will distance themselves from the dollar. It will enable central banks worldwide to continue purchasing gold for reserves.
These developments come amid growing concern over the US banking system among many domestic and international tensions weighing on the greenback. Bulls are flocking to the XAU/USD pair, with buyers eyeing an extension.
As a result, the pair has been rallying, supported by the bullish trend. Since Tuesday, the Fed and the BoE have decided on interest rates, with some observers predicting that the DXY will drop to end-of-January lows. According to the weekly DXY chart, the price is dipping this week and is looking for support regions while it forms the “M” formation.
This reversion pattern could ensure that the DXY retreats towards the neckline and sustains this period for the foreseeable future. Despite all these pressures, the market bears are optimistic that a slide could occur, basing their predictions on the 4-hour chart.
XAG/USD
The price of silver has been advancing in the past few days and is consolidating at 6-week highs in the North American trading session. This incline comes from the weakening greenback, which is seeing considerable pressure from declining treasury bonds.
As a result, the pair is exchanging hands at $23.12 after smashing a daily low of $22.76. During Wednesday’s Fed meeting, the pair traded sideways at the $22.20 psychological price level before the tumble of the treasury bonds in the US sent shockwaves in the market.
After the crash of the bonds, the price of silver started by testing the $23.00 figure before it pulled back to close at $22.97. However, the price action witnessed on Saturday saw the metal experience an upward trend, with the bulls consolidating around $22.80 and later pushing the pair’s price above the $23.00 mark.
The pair’s bias remains in neutral territory. However, the 20-day EMA at the $21.87 level exceeded the 200-day EMA at the $21.82 level. This price action could lead to a further uptick, with the metal aiming to hit the $24.60 mark.
The pair’s first resistance would occur at February’s low of $23.59. If it can clear this level, the pair will see a sprint toward the $24.00 level, and once broken, it will test the $24.63, which also happens to be the pair’s YTD high. On the other hand, if the bears do take over, the XAG/USD pair could see a price decline.
A close below the $23.00 support level could give the bears the momentum to push the price further down. This price movement could trigger a bearish trend in the market, leading to a potential crash below the psychological price level of $22.66.
If the price breaks below the $23.00 level, it could trigger stop losses for traders holding long positions. This investor action could further exacerbate the downward pressure on the pair and lead to a deeper decline in price.
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