Weaker Dollar Sends Gold Soaring as Silver Eyes Key Resistance

The US dollar's weakness has propelled gold to a three-month high as investors flock to the precious metal. The spot price of gold gained over 5% last week, reaching $4,640. Treasury plans to increase purchases of long-term bonds have pressured the dollar, while higher bond yields are seen as a sign of fiscal stress and policy uncertainty.

Investors may also be viewing stricter US sanctions against Iran as a reason to seek gold as a safe haven. The next move for gold will depend on the July PCE inflation data and Fed Chair Kevin Warsh's Jackson Hole speech, with softer inflation or a cautious tone potentially weakening the dollar and supporting further gains in gold prices.

Gold needs to break above $5,000 to extend its rally towards record highs. The spot gold price has produced a strong weekly bullish candle, rebounding from an ascending trend line that stretches from the October 2023 lows. This constructive bullish price action points to the target of $4,850 and $5,000.

Silver, on the other hand, faces strong resistance at $72, but has already broken a triangle pattern on the line chart. A break above this level could propel silver towards the $90 area. However, failure to clear $72 may lead to a drop towards the $60 area.