Gold and silver are gaining bullish momentum as U.S. inflation data points to softer price pressures, strengthening expectations for Fed rate cuts and weakening the U.S. Dollar (USD). These developments, coupled with geopolitical risks, set the stage for further price action in the precious metals market.
📊 US Inflation Data Boosts Precious Metals
The latest U.S. inflation data showed a modest increase in consumer prices for July, with the Consumer Price Index (CPI) rising 0.2% month-over-month, slower than the 0.3% increase in June. While annual inflation remained steady at 2.7%, the core CPI saw a 0.3% increase, indicating underlying price pressures but not at alarming levels.
- Softer inflation relieves some pressure on the Federal Reserve to maintain high interest rates, creating a favorable environment for gold.
- Rate cut expectations are growing, which could weaken the U.S. Dollar and make gold more attractive as a safe-haven investment.
Additionally, the geopolitical uncertainty surrounding the U.S.-Russia talks in Alaska further supports gold’s safe-haven demand. Lack of progress in these talks could drive more flows into gold.
🧐 Gold Technical Analysis: Consolidation and Potential Breakout
- Gold Daily Chart:
The price of gold is consolidating above $3,250, within a bullish range. As long as it remains above this level, the likelihood of a breakout to $3,500 increases.- Bullish Scenario: A break above $3,500 could send gold toward new highs.
- Bearish Scenario: A drop below $3,250 would bring the price closer to the $3,100–$3,250 support zone, but the broader bullish trend remains intact.
- Gold 4-Hour Chart:
Gold is trading within a range between $3,250 and $3,450. A breakout above $3,450 would likely push the price toward $3,500. The consolidation suggests that gold is preparing for a strong move toward $3,400.
🪙 Silver Technical Analysis: Bullish Reversal After Inflation Data
- Silver Daily Chart:
XAG/USD is consolidating above $35, with a bullish reversal following the release of inflation data. A breakout above $35 could lead to further upside, targeting the $42–$43 region.- The 50-day SMA is acting as strong support, and as long as silver stays above this level, the short-term outlook remains bullish.
- Silver 4-Hour Chart:
Silver is consolidating above $34.50, forming a strong bullish pattern. This suggests that silver prices are likely to continue higher in the near term.
📉 US Dollar Index: Bearish Outlook
- US Dollar Daily Chart:
The U.S. Dollar Index (DXY) shows negative price action, with a sharp upper shadow on Monday. After the inflation data release, the USD is likely to continue its downward trend. As long as the index remains below 100.50, the next move will likely be downward, supporting the bullish case for gold and silver.
🧐 Outlook for Gold and Silver
Both gold and silver are poised to benefit from a weaker USD and expectations of Fed rate cuts. Key levels for gold are $3,250 as support and $3,500 as resistance. For silver, $35 remains a critical support level, with a breakout above $35 setting the stage for further upside.
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