Gold held above $4,000 on Wednesday as softer U.S. inflation data pressured Treasury yields and the dollar, while Strait of Hormuz tension kept oil elevated. Silver slipped, underperforming the yellow metal on weaker momentum.
Gold pushed modestly higher in late-afternoon U.S. trading Wednesday, with spot gold near $4,060.90 an ounce, up 0.23%, as softer consumer- and producer-price reports weighed on Treasury yields and the U.S. dollar. Silver went the other way, trading near $57.68, down 1.52% on the session.
Softer inflation data eases the Fed path
The latest prints shifted positioning toward a less hawkish Fed. Headline CPI fell 0.4% in June and slowed to 3.5% year over year, while core CPI was unchanged on the month. The June producer-price report reinforced that disinflation signal, with final demand prices down 0.3% in June and the annual PPI rate slowing to 5.5%.
Rate expectations moved with the data. July rate-hike odds fell toward 10%, while the probability of a September hike held near 43.9%. The 10-year Treasury yield sat near 4.56% and the dollar index fell to about 100.52, down 0.40%, giving gold room to hold above $4,000.
Oil keeps the inflation risk alive
But the softer data did not clear the picture, because Middle East risk kept crude firm. The U.S. reimposed a naval blockade on Iran and intensified airstrikes after attacks on ships moving through the Strait of Hormuz, while Iran's Revolutionary Guard threatened to halt regional energy exports if the blockade continues. Nymex WTI crude traded around $71.51 a barrel, carrying a Hormuz risk premium.
For gold, the effect cuts both ways. Geopolitical risk supports defensive demand, yet higher oil prices feed inflation concerns that can lift yields.
What traders are watching
Gold spent the session in a $4,016.60 to $4,081.50 range, holding above $4,000 but below the $4,091 to $4,104 resistance band that has capped the latest rebound. A sustained move lower in yields would give the metal a cleaner path to test those levels, while another crude spike would bring the rate and inflation channel back into focus.
Traders now turn to follow-through in Fed-rate expectations, Fed Chair Kevin Warsh's testimony and any fresh disruption to Hormuz shipping lanes.
Sources: Kitco, Seeking Alpha (snippet-based)
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