Gold (XAU) prices rebounded on Tuesday after marking a low at $3,975 last week as oil prices corrected lower due to hopes of peace in the Middle East. The correction in oil prices eased inflation concerns in the short term and triggered the rebound in gold prices.
However, oil prices are again rising on Wednesday and the US dollar index remains strong. The strong rally in the US dollar index after marking a low at the support of the 101.45 level suggests that the rebound in gold might be limited.
Moreover, the US Treasury yields are also consolidating around the 50-day SMA at the support of the 5% level. This suggests that the yields may create a rebound from the current level. I think that these conditions will likely keep gold under pressure in the short term.
Silver (XAG) prices also rebounded towards the $54 level after forming support at the $52.66 level on Tuesday. Despite the rebound, the silver price still remains below the key level of $55. The market is now waiting for the Fed decision and core PCE price index data. In my view, a strong inflation reading may keep the expectation of rate hikes in the future high and limit rebounds in gold and silver prices.
Gold Price Forecast: Rebound Faces Resistance at $4,088
The daily chart for spot gold shows that the price rebounded from the strong support in the $3,950 to $4,000 area and gained nearly 1% on Tuesday. However, the price still remains below the 10-day SMA at $4,088. This indicates that the rebound may be limited in the short term.
A break below $3,950 will open the way for quick drop towards the $3,800 area. This area is seen as strong support at the descending trend line that stretches from October 2025 highs.
On the other hand, if the price recovers above $4,088 in the short term, it may rebound further towards the 50-day SMA near $4,280. As long as the price remains below $4,088 in the short term, the likelihood of downside break is high.
The weekly chart for spot gold also shows that the price remains under pressure as it has formed a head and shoulders formation below the $5,600 level. A weekly close below $3,950 will activate the potential head and shoulders pattern and trigger strong drop towards $3,800. However, a break below $3,800 may push the price further towards the $3,500 area.
The importance of $3,950 is also seen on the 4-hour chart, where the price rebounded from the support area. The immediate resistance is seen at the ascending trend line at the $4,088 level, which is also seen as resistance at the 10-day SMA. A break below $3,950 will indicate further downside. But a recovery above $4,088 may push the price further higher towards the $4,200 level.
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See all Gold forecastsSilver Price Forecast: Recovery Remains Fragile Below $55
The daily chart for spot silver shows that the price has been consolidating below $55. The price remains at the upper boundary of the accumulation zone as seen in the chart below. A recovery above $55 may push the price back within the primary support zone between $ 55 and $ 60.
As long as spot silver remains below $72, the price may consolidate further. But a break above $72 will likely confirm bottom and open the way for further upside towards the $90 level.
The 4-hour chart for spot silver also shows that the price remains under bearish pressure despite the strong rebound yesterday. The price remains within the descending wedge pattern that stretches from January 2026 highs. The support of this wedge pattern lies in the $48 to $50 area. However, a recovery above $63 may break the wedge and trigger strong rally towards $72.
What to Watch Next
Gold and silver prices still remain vulnerable in the short term despite the strong rebound from the key support levels. The strength in the US dollar, oil prices and US Treasury yields may limit the rebound in gold and silver in the short term. Gold must break above $4,088 to suggest further upside in the short term. But a break below $3,950 will open the way for further downside to $3,800.
Silver price must recover above $60 and $64 to ease the bearish pressure and avoid deeper correction to $48-$50. The Fed decision on Wednesday and core PCE price index data on Thursday will likely provide further direction for the gold and silver prices.
Read more: Metals Face Pressure Ahead of the Fed