The early bullish momentum for gold and silver in 2025 has reversed sharply, with surging bond yields and a stronger U.S. dollar contributing to notable declines on Monday. As both metals approach critical technical levels, traders are evaluating potential setups ahead of key risk events, including the upcoming U.S. inflation report.
Gold Holds Ground Above Key Support
Gold, despite Monday’s pullback, remains in an established uptrend and continues to trade above its 50-day moving average (50DMA), a level that has historically offered strong support. Technical indicators such as the RSI (14) and MACD still signal bullish momentum, suggesting a buy-the-dip strategy may appeal to traders.
The recent attempt to break above $2,676.50 on Friday failed to hold, and Monday’s losses brought gold down over 1%. While this is not a bearish engulfing pattern, further near-term weakness is possible as markets brace for the U.S. inflation data release on Wednesday.
A potential retest of the 50DMA could offer an attractive entry point for bullish positions. If gold bounces from this level, traders may consider establishing long positions with tight stops beneath the support for risk management. Targets include Friday’s high of $2,698 and the next significant resistance at $2,725. However, a daily close beneath the 50DMA could signal additional downside, prompting traders to watch how gold interacts with the longer-term November uptrend.
Silver Faces Steeper Reversal
Silver’s recent performance has been more bearish compared to gold. Monday’s pullback resulted in a textbook bearish engulfing candle on the daily chart, pushing the price below the 200-day moving average (200DMA). Momentum indicators such as RSI (14) broke their uptrend decisively, signaling increased risks for further downside.
The $29.50 level has emerged as a critical area of focus, given its significance in recent trading activity. A daily close below this level could confirm a bearish setup, allowing traders to consider short positions with initial targets at $28.75, the December 19 low. Stops above $29.50 can be used for risk management.
On the other hand, if silver holds above $29.50, it may present an opportunity for a reversal trade. In this scenario, traders might establish long positions with stops beneath the level, targeting $29.87 and the 200DMA initially. A break above these levels could increase the likelihood of a retest of the 50DMA.
Key Catalysts Ahead
The upcoming U.S. inflation data is expected to play a pivotal role in determining the next directional moves for both gold and silver. For gold, its modest correlation with U.S. 10-year inflation breakevens and crude oil prices highlights its sensitivity to inflation-linked themes. Meanwhile, silver’s technical struggles underline the need for nimble positioning as momentum shifts.
With both metals at critical junctures, traders are closely monitoring these risk events to identify high-probability setups. Whether gold and silver recover from these pullbacks or extend their declines will largely depend on the macroeconomic landscape and upcoming data releases.
