• Gold price trades flat around $2,455 in Friday’s early Asian session. 
• US July Retail Sales beat expectations, rising 1.0% MoM; Initials Jobless Claims fell 7K to 227K last week.
• The escalating geopolitical risks in the Middle East might cap the Gold’s downside. 

Gold price (XAU/USD) flat lines near $2,455 during the early Asian session on Friday. The yellow metal seesaws between gains and losses amid the consolidation of the US Dollar (USD). Traders will focus on the preliminary of the US Michigan Consumer Sentiment Index for August, along with the Building Permits and Housing Starts. 

Following the release of encouraging employment-related data and strong retail sales, speculative interest in the world’s biggest economy decreased, easing fears about a potential recession. However, traders still see the US Federal Reserve (Fed) start easing the policy in September. According to the CME FedWatch Tool, the markets are now pricing in a nearly 80% chance of a September rate cut and expect 200 basis points (bps) of reduction in the next 12 months, though that will depend on incoming data.

Data released by the US Census Bureau on Thursday showed that Retail Sales in the United States rose by 1.0% MoM in July, compared to a decline of 0.2% in June. This figure surpassed the estimation of a 0.3 increase. Meanwhile, the Initial Jobless Claims for the week ending August 10 arrived at 227K, better than the expectation of 235K and down from the previous week of 234K. The recent stronger job data and upbeat Retail Sales have strengthened the USD broadly and weighed on the precious metal. 

Nonetheless, the elevated geopolitical risks in the Middle East might provide some support to Gold price, a traditional safe-haven asset. Gaza’s Health Ministry says more than 40,000 Palestinians have been killed in Israeli attacks since October 7, with many more buried under rubble and threatened by illness, according to local news source Aljazeera. 

• Silver price drops from intraday high of $28.44 after resilient US Retail Sales data for July.
• Back-to-back decline in US jobless claims suggest that labor market conditions are not as worse as it was anticipated.
• Strong US Retail Sales have prompted a strong recovery in the US Dollar and bond yields.

Silver price (XAG/USD) gives up some of its intraday gains in Thursday’s New York session after the release of the resilient United States (US) Retail Sales data for July and lower-than-expected number of individuals claiming jobless benefits for the first time in the week ending August 9.

The white metal struggles to hold the crucial support of $28.00 as upbeat US data has boosted the US Dollar (USD) and bond yields. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back above 103.00. 10-year US Treasury yields soar to near 3.96%. Higher yields on interest-bearing assets weigh on non-yielding assets, such as Silver, by increasing the opportunity cost of holding investment in them.

The Retail Sales, a key measure of consumer spending, returned to expansion and rose at a robust pace of 1% from the estimates of 0.3%. Meanwhile, Initial Jobless Claims came in in lower at 227K than estimates of 235K and the prior release of 234K, upwardly revised from 233K. This is the second consecutive time when number of jobless claims have come in lower than expectations, suggesting that labor market conditions are not as bad as they were indicated by the Nonfarm Payrolls (NFP) data for July.

Meanwhile, the near-term outlook of the Silver price remains firm as investors remain confident that the Federal Reserve (Fed) will begin reducing interest rates from the September meeting. However, upbeat data have dashed hopes the Fed will adopt an aggressive policy-easing stance.

Silver technical analysis

Silver price bounced back after a negative divergence formation on a four-hour timeframe, which shapes when the momentum oscillator refuses to make lower lows, while the asset continues that formation. The 14-period Relative Strength Index (RSI) rebounded from 24.00 without hitting downside below previous low of 20.00.

However, the above-mentioned formation would trigger if the white metal breaks above the immediate swing high plotted from the August 2 high of $29.23.

The asset stays above the 20-period Exponential Moving Average (EMA) near $27.80, suggesting that the near-term trend has leaned on the upside.

The 14-period RSI has bounced back to near 60.00 and a decisive break above the same will trigger the upside momentum.

Silver four-hour chart

With the Israel Hamas conflict continuing to mount and even reports of the United States preparing to ship $750 million worth of bombs to Saudi Arabia, oil prices are trending lower due to Tuesday’s IEA report that forecast lower oil demand growth in 2025 than it was previously predicting. 

The IEA didn’t change its 2024 forecast, but the oil markets recoiled at the prospect of smaller oil demand growth next year, rising only 950,000 bpd—just a 30,000 bpd reduction from its previous forecast. 

At 11:46 pm CST, Brent crude was trading down 1.68% at $80.91 per barrel—a drop of $1.38 per barrel on the day. WTI crude was trading down 2 on the day at $78.62 per barrel. For Brent, the price is still $4 above where it was trading this same time last week. 

Find more oil prices from around the world here

The demand growth outlook’s effect on oil prices was undaunted by reports of the United States lifting 2021 restrictions on the sale of bombs to Saudi Arabia and its subsequent shipment of more than $750 million worth of bombs to Saudi Arabia—a move that may improve relations between the United States and Saudi Arabia, but could heat up tensions in the Middle East, particularly the war Saudi Arabia against the Houthi rebels in Yemen. The Biden Administration has enjoyed a strained relationship with Saudi Arabia after The U.S. president shunned the Saudi royals due to its assassination of journalist and dissident Jamal Khashoggi.

Those deliveries of the bombs are likely to start in several months. Saudi Arabia’s military renewed its strikes on Houthi targets just yesterday, pro-Iranian media reported on Monday, with Saudi drones striking the Al-Ghor area and Kamaran Island near the port of Hodeida.

By Julianne Geiger

More Top Reads From Oilprice.com

XAU/USD Current price: $2,457.30

• Financial markets welcomed US data pushing away recession-related fears.
• Stock markets are rallying with optimism, with US indexes challenging fresh weekly highs.
• XAU/USD holds within familiar levels, buyers still take their chances on dips.

Spot Gold trades with modest gains in the American afternoon, having experienced some early volatility. XAU/USD fell to $2,432.04 ahead of Wall Street’s opening as a batch of United States (US) data pushed speculative interest away from the safe-haven metal. Financial markets welcomed news that US Retail Sales rose by 1% in July, far better than the 0.3% advance anticipated. Furthermore, Initial Jobless Claims rose by less than anticipated in the week ending August 9, up 227K vs the 235K forecast.

The US Dollar surged with the news against all major rivals, while US indexes also advanced, as the numbers spooked fears of a recession while maintaining unchanged the odds for an upcoming Federal Reserve (Fed) interest rate cut. Stock markets remained optimistic after the opening, extending gains to fresh weekly highs, but the USD retreated. The second batch of US data was less encouraging, as Capacity Utilization hit 77.8% in July while Industrial Production in the same month was down 0.6%, both worse than expected and below June figures.

XAU/USD short-term technical outlook  

The daily chart for the XAU/USD pair shows it remains within familiar levels, and while trading in the green, it posted a lower high and a lower low, usually seen as a bearish sign. Technical indicators have turned marginally lower but remain within positive levels, limiting the odds of a steeper decline. Finally, the pair keeps developing above all its moving averages, with the 20 Simple Moving Average (SMA) flat above bullish 100 and 200 SMAs. Overall, the case of a steeper leg lower seems unlikely.

In the near term, and according to the 4-hour chart, the pair is neutral-to-bullish. Technical indicators turned higher, but remain at around their midlines. Meanwhile, a mildly bullish 20 SMA provides dynamic resistance a few $ above the current level,  while the longer moving averages extended their modest upward slopes below the current level. More relevantly, buyers defend the downside at around the 23.6% Fibonacci retracement of the June/July rally at $2,438.80.

Support levels:  2,438.80 2,4260.90 2,438.80

Resistance levels: 2,471.10 2,483.70 2,495.00

Short One-Day Pullback

A one-day pullback was reversed yesterday leading to trend continuation signal. It was further confirmed with today’s advance to a high of 2.30. Resistance was seen off that high and was followed by a pullback to below the 2.27 pivot. At the time of this writing natural gas is poised to end Thursday’s trading session below the 2.27 level as it is trading within the lower half of the day’s range. Yet, a new higher daily higher and higher low should complete today.

Potential Support Begins at 2.13

Given the quick recovery of the bull trend following a one-day decline, it looks likely that natural gas may continue higher before a deeper pullback. Nonetheless, there are a couple potential support zones to be aware of. First, there is the pullback low of 2.13 from Tuesday. It is quickly followed by the 20-Day MA at 2.10. There is also the 50% retracement level at 2.07.

On the Upside

On the upside, natural gas has been rising following a -40.2% drop from the June 11 swing high of 3.16. That peak was a failed bullish breakout attempt above a prior trend line (blue dots). It remains on the chart only as an additional guide. The current advance has the potential to again attempt a breakout of the top trendline, which has been redrawn to account for the June 11 lower swing high. Therefore, the outlook for natural gas remains bullish.

Initial upside targets start with the 31.8% Fibonacci retracement at 2.37. Given the potential upside momentum it seems likely that this price level would be exceeded. The 50-Day MA is then at 2.40. Since the 20-Day MA was exceeded, the 50-Day line at 2.52 becomes the next moving average target, along with a previous pullback low at 2.475.

For a look at all of today’s economic events, check out our economic calendar.

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CPI Report and Fed Expectations

Investors are closely monitoring the CPI figures for insights into future Federal Reserve policy. The Core CPI, which excludes volatile food and energy prices, is projected to rise by 0.2% month-over-month and 3.2% year-over-year. Concerns about the U.S. economy’s health have grown recently, with some market participants questioning whether the Fed should have already initiated rate cuts. As of Wednesday, traders were fully pricing in a rate cut in September, though opinions varied on its size.

The Federal Reserve, after its July meeting, left rates unchanged but hinted that a cut could be on the table depending on incoming economic data. The market’s current pricing reflects a 52.5% chance of a 50 basis point cut in September, according to the CME FedWatch Tool. U.S. Treasury yields, which tend to move inversely with gold prices, fell slightly on Wednesday as investors digested the implications of the upcoming CPI release.

Geopolitical Risks Boost Safe-Haven Demand

Gold’s appeal as a safe-haven asset has been bolstered by ongoing tensions in the Middle East. Iran’s threat of retaliation following the death of a Hamas leader has heightened fears of a broader conflict, driving demand for gold. Any escalation in the region could push prices higher, with the potential for gold to reach new records if combined with dovish signals from the Federal Reserve.

Market Forecast: Bullish Outlook for Gold

Given the current market environment—characterized by expectations of a rate cut, moderating U.S. inflation, and persistent geopolitical risks—gold prices are likely to continue their upward trend. Traders should watch for a possible all-time high in the near term, particularly if the CPI data supports the case for a significant reduction in U.S. interest rates.

Technical Analysis

• Silver price faces immediate resistance around the 14-day EMA at $28.00 level.
• The daily chart analysis indicates a breakout above a descending triangle, suggesting a potential bullish trend reversal.
• The upper boundary of the descending triangle around the $27.75 level acts as immediate support.

Silver price (XAG/USD) price retraces its recent gains, trading around $27.90 per troy ounce during the European session on Wednesday. The analysis of the daily chart shows a breakout above a descending triangle pattern, which is considered a positive signal. This breakout suggests that the market may be shifting from a bearish to a bullish bias.

Additionally, the 14-day Relative Strength Index (RSI) is consolidating below 50 level, suggesting a downward trend. A break above the 50 level would indicate the emergence of an upward trend.

Additionally, the Moving Average Convergence Divergence (MACD) line has crossed above the signal line, suggesting a potential bullish signal. However, since both lines remain below the centerline (zero line), this indicates that the overall trend is still bearish. It might be wise to wait for further confirmation before making any significant trading decisions.

In terms of support, the Silver price is testing the upper boundary of the descending triangle around the $27.75 level. A return to the descending triangle would reinforce the bearish bias and push the metal asset to navigate the region around the $26.60 level, followed by May’s low at the $26.02 level.

On the upside, the Silver price tests an immediate resistance around the 14-day Exponential Moving Average (EMA) at the $28.00 level, followed by the “throwback support turned resistance” at the $28.60 level. A breakthrough above the latter could lead the XAG/USD pair to explore the region around the two-month high at the $31.75 level.

XAG/USD: Daily Chart

• Gold price defends $2,450, as buyers stay hopeful ahead of key US CPI data.
• The US Dollar and Treasury bond yields lick soft PPI data-inflicted wounds.
• Gold price teases upside break from a symmetrical triangle amid a daily bullish RSI.    

Gold price is defending the $2,450 psychological level, looking to the one-week high of $2,477 on the US Consumer Price Index (CPI) inflation day.

All eyes remain on the key US CPI inflation data

Gold buyers remain expectant of a softer US CPI report, following a bigger-than-expected cool-off in the Producer Price Index (PPI) inflation data published a day ago.

The US will hog attention later on Tuesday while the US Consumer Price Index (CPI) inflation release will stand out on Wednesday. The US Labor Department’s Bureau of Labor Statistics reported Tuesday that the headline PPI increased 2.2%, a sharp drop from the 2.7% reading in June, coming in below the expected 2.3% rise.

The data triggered a risk rally on Wall Street, as it reinforced dovish US Federal Reserve (Fed) expectations, smashing the US Dollar across the board in tandem with the US Treasury bond yields. Increased dovish Fed bets cushioned the corrective downside in the non-interest-bearing Gold price, as markets resorted to profit-taking after the bright metal reverted toward all-time highs in the lead-up to the US CPI showdown.

Markets are currently pricing in a 54% chance of a 50 basis points (bps) interest-rate cut by the Fed in September, according to the CME Group’s FedWatch Tool.

Meanwhile, the US annual CPI is seen rising 2.9% in July, compared to the 3% figure recorded in June. The annual core CPI inflation is set to ease to 3.2% in the same period vs. June’s 3.3%. Over the month, the CPI is expected to rebound 0.2% in July while the core CPI will likely inch a tad higher to 0.2%.

A softer-than-expected headline annual CPI print could confirm bets of aggressive and big Fed rate cuts, providing extra legs to the US Dollar downtrend. Gold price, in turn, could clinch fresh record highs.  

Besides, Gold price will continue to find support from the rife Middle East geopolitical tensions, with markets bracing for an imminent Iranian attack on Israel. Additionally, speeches from Fed policymakers will also help influence the Gold price action.

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price is challenging the upper boundary of a symmetrical triangle formation, now at $2,471.

Gold buyers look to the US CPI data to secure a daily candlestick closing above that level, which could then trigger a fresh advance to the $2,500 mark.

However, Gold price needs to take out the all-time high of $2,484, at first.

The key leading indicator, the 14-day Relative Strength Index (RSI) points lower but stays above the 50 level, suggesting that Gold price will continue to see dip demand.

On the other hand, an upside surprise in the US CPI data could revive the selling interest, dragging Gold price back toward the  21-day Simple Moving Average (SMA) support at $2,420 holds.

Ahead of that, the August 9 high of $2,437 could lend some support to Gold buyers.

Should the selling momentum intensify, with the 21-day SMA giving way, the next relevant support is seen at $2,380, where the lower boundary of the triangle and the 50-day SMA converge.