• Gold price posts modest gains around $2,465 in Wednesday’s early Asian session. 
• The escalating tensions in the Middle East increase safe-haven demand, benefiting Gold. 
• The US July Consumer Price Index report will be the highlight on Wednesday. 

Gold price (XAU/USD) trades with mild gains near $2,465 during the early Asian session on Wednesday. The upside of the yellow metal might be underpinned by the safe-haven flows amid ongoing tensions in the Middle East. Traders will closely watch the release of the US July Consumer Price Index (CPI), which is due later on Wednesday. 

Safe-haven demand from heightened tensions in the Middle East might lift the precious metal in the near term. The BBC reported on Tuesday that the United States sent a guided missile submarine to the Middle East as tensions rise in the region. The action comes in response to fears of a wider regional conflict after the recent assassination of senior Hezbollah and Hamas leaders. Analysts from Saxo Bank A/S noted that gold remains “supported by geopolitical risks and anticipated Federal Reserve rate cuts amid heightened tensions” involving Iran and Israel as well as Ukraine. 

On Tuesday, Atlanta Fed President Raphael Bostic said that recent economic data made him “more confident” that the Fed can get inflation back to its 2% target. Still, more evidence is needed before he’s ready to support lowering interest rates. 

The US CPI inflation report on Wednesday could offer some hints about the Federal Reserve’s (Fed) interest rate cut path. The CPI is expected to increase 0.2% MoM in July, compared to the previous month of a 0.1% decline. On an annual basis, the CPI inflation is estimated to ease to 2.9% in July from 3.0% in June. 

The softer reading could fuel the chance of a Fed rate cut in September. On the other hand, a hotter inflation outcome might diminish the odds of a Fed easing policy, which is likely to exert some selling pressure on the non-yielding Gold. 

Drop to 20-Day MA at 2.09 Next in Line

A decline below today’s low of 2.14 will trigger a bearish continuation of today’s pullback. The 20-Day MA at 2.09 looks to be the first area to watch for support. If it fails to hold, there is a price zone to watch from around 2.03 to 2.02, and it includes the 61.8% Fibonacci retracement at 2.025. One of the reasons that natural gas is anticipated to continue higher following a pullback is that it triggered a bullish weekly reversal signal last week on a rally above the three-week high at 2.15.

Weekly Reversal Just Getting Started

A reversal week completed last week, and the week ended strong, in the top quarter of the week’s trading range. Also, the week ended above 2.15 at 2.16. Moreover, Monday’s rally triggered a bullish continuation of the weekly chart. This was the first time in eight weeks that natural gas exceeded the high of a prior week. These signs of strength should lead to further upside.

Since the 20-Day MA was cleared last week with a rally above 2.10, natural gas is showing strength that may result in a continuation of the current advance up to the 50-Day MA, now at 2.42. Prior to that price level there is the 38.2% Fibonacci retracement at 2.37, while the 50% retracement is at 2.42.

Watching for Clues During Pullback

Characteristics of the current pullback should assist in determining short-term underlying strength in natural gas. A bullish reversal following a test of support at the 20-Day line would be a stronger sign than a drop to test support around the 61.8% Fibonacci level at 2.025, for example.

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

• Silver price remains on backfoot even though the US PPI turned out softer-than-expected in July.
• Soft US producer inflation has increased investors’ confidence that price pressures remain on path that leads to banks’ target of 2%.
• Middle East conflicts limit Silver price’s downside.

Silver price (XAG/USD) faces pressure in Tuesday’s American session even though the United States (US) producer inflation remained soft in July. The US Bureau of Labor Statistics (BLS) showed that the core Producer Price Inflation (PPI), which strips off volatile food and energy prices, remains flat month-on-month. Annually, the underlying PPI decelerated at a faster-than-expected pace to 2.4% from expectations of 2.7% and the former release of 2.4%.

Soft US producer inflation has affirmed confidence among investors that price pressures continue to moderate. This has weighed on the US Dollar (USD) and bond yields by boosting expectations of a big interest-rate cut announcement by the Federal Reserve (Fed) in September.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, skids below the crucial support of 103.00. 10-year US Treasury Yields tumble to near 3.87%. Historically, lower yields on interest-bearing assets reduce the opportunity cost of holding investment in non-yielding assets, such as Silver. However, the Silver price declines too as investors await for more evidence to confirm that inflation is on track to return to the desired rate of 2%.

For more evidence, investors will focus on the US Consumer Price Index (CPI) data for July, which will be published on Wednesday. The CPI report is expected to show that monthly headline and core inflation rose by 0.2%. Annual headline and core CPI are estimated to have decelerated by one-tenth to 2.9% and 3.2%, respectively.

Meanwhile, geopolitical risks continue to limit the downside in the Silver price. Investors expect an all-out war in the Middle East between Iran and Israel after the killing of Hamas leader in Tehran.

Silver technical forecast

Silver price finds an interim support near the 200-day Exponential Moving Average (EMA) near $26.90, suggesting that the overall trend is uncertain. The major cushion for the Silver price will be the horizontal support plotted from May 5 high at $26.14.

The 14-day Relative Strength Index (RSI) hovers near 40.00. A decisive break below the same will trigger a bearish momentum.

Silver daily chart

XAU/USD Current price: $2,470.00

• The United States will publish the July Consumer Price Index on Wednesday.
• Financial markets adopted a cautious stance ahead of first-tier figures from the US and the UK.
• XAU/USD consolidates near record highs, bulls hold the grip.

Gold price moved one step closer to its record high on Tuesday, hitting $2,476.81 during Asian trading hours. XAU/USD, however, spent most of the day stuck to its daily opening level at around $2,470 as market players turned cautious ahead of first-tier headlines. Following a relatively quiet week in terms of macroeconomic releases, the focus returns to inflation.

The United Kingdom (UK) and the United States (US) will publish fresh Consumer Price Index (CPI) figures on Wednesday. The numbers will affect the respective central banks’ decisions and, hence, affect both currencies in the near term. Clearly, US figures will have a larger impact on the bright metal, as the Federal Reserve (Fed) has yet to decide on an interest rate cut.

Financial markets have had erratic sentiments about what and when the Fed may act. The central bank, however, has just recently shifted into a more dovish stance, paving the way for a September rate cut. Just recently, tepid growth related data boosted speculation the Fed has no choice but to trim interest rates next month.

Indeed, inflation figures will have a saying, as softer-than-anticipated CPI numbers will further pave the way towards lower rates. Ahead of the event, the US published the July Producer Price Index (PPI), which rose 0.1% MoM in July as expected, while the annual increase resulted at 2.2%, below the 2.3% anticipated and the previous 2.7%. The core annual inflation at wholesale levels eased from 3% in June to 2.4%.

XAU/USD short-term technical outlook  

From a technical point of view, the daily chart for XAU/USD shows bulls retain control. The pair holds well above all its moving averages, with the 20 Simple Moving Average (SMA) partially losing its bullish strength but still providing dynamic support at around 2,420.00. At the same time, the Momentum indicator keeps grinding higher well above its midline, while the Relative Strength (RSI) indicator consolidates at around 61, skewing the risk to the upside.

XAU/USD is poised to retest its record high at $2,483.68. The pair trades well above all its moving averages, with a bullish 20 SMA accelerating north above the 100 and 200 SMA, which slowly gain upward traction. Finally, technical indicators maintain modest upward slopes well above their midlines, reflecting the ongoing consolidation yet maintaining the risk skewed to the upside.

Support levels: 2,458.30 2,442.90 2,438.80

Resistance levels: 2,483.70 2,495.10 2,510.00

• Silver price jumps to near $28 on multiple tailwinds.
• Market speculation for Fed big rate cuts in September has waned significantly.
• Investors await the US CPI for July for fresh guidance on interest rates.

Silver price (XAG/USD) surges to near $28.00 in Monday’s North American session. The white metal gains amid geopolitical risks and firm speculation that the Federal Reserve (Fed) will start reducing interest rates from the September meeting.

Conflicts between Iran and Israel in the Middle East are expected to widen further as the former is expected to retaliate for the assassination of the Hamas leader by an Israeli air strike in Tehran. The appeal of Silver as a safe haven improves amid geopolitical uncertainty.

Meanwhile, market speculation for the Fed rate cuts in September remain robust but uncertainty over the size has deepened significantly. According to the CME FedWatch tool, 30-day Federal Funds Futures pricing data shows that traders see a 46.5% chance that interest rates will be reduced by 50 basis points (bps) in September. The likelihood of a 50 bp rate reduction has weakened significantly from 85%, recorded a week ago.

A sharp decline in the Fed’s big interest-rate cut prospects has offered some support to the US Dollar (USD) and bond yields. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, steadies above 103.00. 10-year US Treasury yields hover near 3.95%.

Going forward, investors will focus on the United States (US) Consumer Price Index (CPI) data for July, which will be published Wednesday. Headline and core CPI, which strips off volatile food and energy prices, are expected to have decelerated to 2.9% and 3.2%, respectively.

Silver technical analysis

Silver price rises to near the upward boundary of the Falling Channel formation in a four-hour timeframe. Usually, investors see pullbacks in the above-mentioned chart pattern as selling opportunities by market participants. The asset remains below the 200-period Exponential Moving Average (EMA) near $28.76, suggesting that the overall outlook is bullish.

The 14-period Relative Strength Index (RSI) attempts to break above 60.00. Sustenance above the same would improve Silver’s appeal.

Silver four-hour chart

• Gold price pulls back from six-day highs, as traders lock in gains ahead of key US inflation data.
• The US Dollar stalls decline amid pre-US CPI anxiety and looming Mid-East geopolitical risks.
• ‘Buy-the-dips’ in Gold price while 21-day SMA holds and daily RSI stays bullish on the daily chart.    

Gold price is retreating from near a one-week high of $2,473 set on Monday, as traders lock in gains ahead of the key US inflation reports. The US Producer Price Index (PPI) data will hog attention later on Tuesday while the US Consumer Price Index (CPI) inflation release will stand out on Wednesday.  

Iran-Israel escalation and US inflation data on tap

Markets eagerly await the high-impact inflation data from the US to gauge whether a big interest-rate hike by the US Federal Reserve (Fed) is in the offing, especially following the weak jobs report, which triggered recessionary fears and ramped up aggressive Fed rate cut bets.

Markets are now pricing in about 50% chance of a 50 bps rate cut in September by the Fed, according to the CME Group’s FedWatch Tool. Meanwhile, the headline annual CPI is set to rise 2.9% in July afte increasing by 3.0% in June. Meanwhile, the core inflation is expected to edge a tad lower to 3.2% YoY in July versus June’s 3.3% print.

That said, the US headline annual PPI is seen rising 2.3% in July after reporting a 2.6% growth in June. The core PPI inflation is set to decline from 3.0% YoY in June to 2.7% in July. The likely progress in disinflation will pave the way for a notable easing by the Fed, which could bode well for the non-interest-bearing Gold price.

Amidst increased dovish Fed expecttions, the US Treasury bond yields remain on the losing end, also hit by the rife Middle East tensions, which drive risk-off flows into the safe-haven assets such as the US government bonds and Gold price.

The traditonal safety bet, Gold price, jumped over 1% on risk aversion, courtesy of the from heightened tensions in the Middle East. White House spokesman John Kirby said late Monday that Iran could launch ‘significant’ attack on Israel this week and that the timing could affect Gaza ceasefire talks, currently scheduled to resume on August 15.

“Israel’s military and Lebanon’s Hezbollah militant group have traded strikes since the current war in Gaza began, but tensions have escalated since an Israeli strike in a Beirut suburb killed a top Hezbollah commander last month. Hezbollah has vowed to retaliate,”per CNBC News.

On Sunday, Axios reported that the Israeli intelligence community is put on a high alert, as it is believed that Iran has decided to attack Israel directly and may do so within days.

Looking ahead, geopolitical developments between Israel and Iran-backed militant groups – Hamas and Hezbollah will continue to lead sentiment and impact the value of Gold price. US inflation data and speeches from Fed policymakers will be also closely followed.

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price accelerated its recovery mode and tested the upper boundary of a symmetrical triangle formation, then pegged at $2,473.

Hwever, Gold buyers fail to secure a daily candlestick closnig above that level triggernig a fresh pullback from near a weekly high.

The key leading indicator, the 14-day Relative Strength Index (RSI) has turned south but stays above the 50 level, suggesting that any pullback in Gold price is likely to be bought into so long as the  21-day Simple Moving Average (SMA) at $2,421 holds.

However, if the pullback extends, the 21-day SMA could give way to unleash further downside, with the immediate support then seen at $2,380, where the lower boundary of the triangle and the 50-day SMA converge.

Ahead of that demand area, the $2,400 threshold could rescue buyers.

Alternatively, acceptance above the aforesaid triangle resistance, now at $2,475, is critical to taking on the record high of $2,484, above which a test of the $2,500 mark will be inevitable.

• Silver price edges lower as traders ease back on a deeper rate cut by the Fed in September.
• CME’s FedWatch Tool suggests odds of a 50 basis points cut by the Fed in September have dropped to 50%.
• Israeli forces continued their operations near the southern Gaza city of Khan Younis on Monday.

Silver price (XAG/USD) retraces its recent gains from the previous session, trading around $27.70 during the Asian session on Tuesday. This downside could be attributed to diminished expectations for a 50-basis point interest rate cut by the US Federal Reserve in September.

US Federal Reserve (Fed) in September. According to CME’s FedWatch Tool, the probability of 50 basis points (bps) cut in September has dropped to 50%, down from 85% last week. However, the rate markets continue to price in a 100% chance of at least a 25 bps cut at the upcoming meeting.

Traders are likely to focus on US producer inflation data due on Tuesday and consumer inflation figures on Wednesday, looking for confirmation that price growth remains stable in the United States (US).

The downside of safe-haven metals like Silver could be restrained due to rising geopolitical tensions in the Middle East. Israeli forces pressed on with their operations near the southern Gaza city of Khan Younis on Monday. CBC News cited Palestinian medics saying Israeli military strikes on Khan Younis on Monday killed at least 18 people.

On Monday, Israel Defense Forces (IDF) intercepted around 30 “projectiles” crossing from Lebanon into northern Israel early Monday. The IDF stated that some projectiles landed in open areas, and no injuries were reported, as reported by ABC News.

XAU/USD Current price: $2,464.29

• Speculation that the Fed has no choice but to trim interest rates weighs on the US Dollar.
• The United States will publish the July Consumer Price Index later this week.
• XAU/USD is poised to extend gains despite near-term overbought conditions.

Spot Gold kept rallying on Monday, up for a third consecutive day and currently trading above $2,460 a troy ounce. The bright metal kicked off the week with a positive tone amid easing demand for the US Dollar. Meanwhile, concerns about escalating tensions in the Middle East fueled demand for Gold. Western countries issued a warning about a potential attack from Iran on Israel that would dilute any chance of a cease-fire.

XAU/USD surged on the back of mounting speculation the United States (US) Federal Reserve (Fed) had no more room to delay rate cuts. The Fed is expected to deliver its first cut in the upcoming September meeting, with a potential 50 basis points (bps) trim on the table.

US data to be out this week may shed some light on the matter: The country will publish July inflation data next Wednesday. The Consumer Price Index (CPI) is foreseen to tick modestly lower compared to the previous month but still above the central bank’s goal of around 2%. However, it’s not all about inflation. Policymakers will have to assess the risk of an economic setback should they decide not to trim record rates.

XAU/USD short-term technical outlook  

From a technical point of view, XAU/USD is poised to extend its advance. In the daily chart, technical indicators have turned north after a brief consolidation within positive levels. Furthermore, the pair is trading above all its moving averages, with the 20 Simple Moving Average (SMA) gaining upward traction above already bullish 100 and 200 SMAs. XAU/USD has overcome the 23.6% Fibonacci retracement of the June/July rally at $2,438.80, a relevant support level in the case of a pullback.

In the near term, and according to the 4-hour chart, XAU/USD is overbought but giving no signs of changing course as the pair pressures its intraday high. Technical indicators, in the meantime, pared their advances and hover within extreme levels, reflecting the ongoing pause rather than suggesting an upcoming decline. Finally, the 20 SMA heads firmly north below the current level and above directionless longer ones, reflecting bulls’ dominance and maintaining the risk skewed to the upside.

  Support levels: 2,442.90 2,438.80 2,425.10

Resistance levels: 2,466.00 2,483.70 2,495.10 

First Wedge Target May See Pullback

That 2.27 price level was resistance on July 22. It also marks the beginning of a bullish descending wedge pattern (orange boundary lines). The beginning of the wedge is typically the minimum target for the pattern. Arguably, that target of 2.27 was reached with today’s high of 2.26. After today’s close a drop below the 2.155 low of the day will trigger a daily bearish reversal. The 20-Day MA is the first obvious target at 2.09.

20-Day MA is Crucial Near-term Support

A near-term bullish outlook would be maintained as long as natural gas stays above the 20-Day line. It had been marking trend resistance since late-June until last Thursday’s bullish breakout. Subsequently, if price is rejected to the upside upon approach, the 20-Day line will be confirmed as having switched to a line of potential support.

That would be bullish behavior that may mark the end of a retracement. However, there is also a potential support zone lower down around 2.03 to 2.02. That range begins with the low from last Thursday and was an area of daily support or resistance at more than several times over the past month.

Weekly Bullish Reversal Points to Higher Prices

If a pullback comes before a rally above the 2.27 interim swing high, it is anticipated to eventually resolve itself to the upside as a bullish reversal may still be in its early stages. In addition to a bullish wedge breakout last week, natural gas also triggered a bullish reversal on the weekly chart. Today’s advance further confirms the breakout. It was the first time in eight weeks that a prior week’s high was exceeded to the upside. This is bullish behavior occurring on the longer time frame chart, which is more significant than the daily and lower periods.

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

• Gold price consolidates the previous week’s late rebound, as the US CPI week kicks off.
• A sense of caution prevails on pre-US CPI anxiety and geopolitical risks, supporting the US Dollar.
• Dovish Fed bets could limit any Gold price downside while the 21-day SMA holds and the daily RSI stays bullish.    

Gold price is trading on the back foot near $2,430 early Monday, consolidating the previous week’s late recovery. Traders appear non-committal and refrain from placing fresh bets on Gold price,  bracing for an action-packed week, with US Consumer Price Index (CPI) inflation data in the spotlight.

Gold price braces for Iran-Israel escalation and key US data

Traders take account of the latest developments surrounding the Middle-East geopolitical tensions, with Israel preparing for an imminent attack by Iran, in retaliation for the assassination of Hamas leader Ismail Haniyeh in Tehran in late July. On Sunday, Axios reported that the Israeli intelligence community is put on a high alert, as it is believed that Iran has decided to attack Israel directly and may do so within days.

Meanwhile, ABC News reported early Monday that the Israel Defense Forces (IDF) intercepted roughly 30 “projectiles” that were identified as crossing from Lebanon into northern Israel. This comes even as Hamas proposed a cease-fire implementation plan after a diplomatic push from the United States, Egypt and Qatar for a new round of talks to take place between Israel and Hamas on Aug. 15 in either Doha or Cairo. 

If the Iran-backed militant groups, Hezbollah and Hamas, turn down any cease-fire attempts and attack Israel, the escalation could very well translate into a wider regional conflict. Mounting geopolitical tensions are likely to keep the safe-haven US Dollar (USD) buoyed, weighing negatively on the USD-denominated Gold price.

However, the downside in the Gold price could likely be cushioned by the increased bets that the US Federal Reserve (Fed) will lower interest rates by 50 basis points (bps) in September. Although the odds for such a move have fallen to less than 50% when compared to about 75% a week ago, the CME Group’s FedWatch Tool showed.

This could be attributed to Fed Governor Michelle Bowman’s caution on rate cuts during her speech on Saturday. Bowman noted that there is some further “welcome” progress on inflation even as inflation remains “uncomfortably above” the central bank’s 2% goal.

Markets remain in a wait-and-see mode before taking any calls on the next Gold price direction, as position readjustments could be seen heading into Wednesday’s US CPI showdown. The headline annual CPI is set to rise 2.9% in July after increasing by 3.0% in June. Meanwhile, the core inflation is expected to edge a tad lower to 3.2% YoY in July versus June’s 3.3% print.

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price keeps its range while holding within a symmetrical triangle formation.

The key leading indicator, the 14-day Relative Strength Index (RSI) holds well above the 50 level, suggesting that upside risks remain in place for Gold price in the near term.

Gold buyers also stay hopeful so long as the  21-day Simple Moving Average (SMA) at $2,417 holds.

However, if the pullback extends, sellers need to crack the 21-day SMA on a daily closing basis to unleash further downside.

Further south, the $2,400 threshold will come into play, below which the rising trendline support at $2,388 will be under threat.

Alternatively, the immediate upside barrier is seen at the August 5 high of $2,459, above which the falling trendline resistance at $2,465 and the two-week high of $2,478 will be challenged.