Gold and silver kept sliding on Wednesday as traders weighed the Federal Reserve's policy outlook before the US inflation report. An Investing.com analyst sees a possible short-term recovery, but says a reversal is not confirmed and further downside remains possible.
Gold and silver faced selling pressure on Wednesday as traders assessed the Fed's policy outlook ahead of the September US Consumer Price Index report. Renewed Middle East tensions and worries about rising energy prices added to the uncertainty.
During the afternoon European session, Gold December futures traded around $4158.34 per ounce, while Silver December futures reached approximately $58.598.
Oil and rate expectations weigh on metals
Renewed attacks in the Middle East have raised concerns about possible disruptions to energy supplies. Higher crude oil prices could contribute to persistent inflation, which might make central banks more cautious about easing policy.
If those worries turn into expectations of tighter policy, gold and silver could face more pressure from higher yields and a stronger US dollar, the analyst writes. Higher rates generally weigh on gold because it pays no interest, which raises the opportunity cost of holding it.
Three ways the CPI report could land
The analyst frames the data as a fork. Softer inflation could support both metals if yields and the dollar decline, while stronger inflation could add pressure if markets expect tighter policy. Mixed data could trigger sharp swings in both directions.
The reaction will depend on the reported figures relative to expectations and the accompanying policy outlook.
Analyst flags levels to watch
The analyst watches a $4149 – $4159 range per ounce for Gold December futures, with upside targets of $4200, $4210 and $4220. For Silver December futures, the range is $58.400 – $58.600, with targets of $59.600, $60.000 and $60.500.
The analyst calls these conditional trading scenarios, not confirmed trend reversals. A break below the gold zone with accelerating selling could weaken the bullish case, and the analyst advises a predefined stop-loss and appropriate position sizing around the release.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
