Gold futures are stalling below key resistance as sticky U.S. inflation data leaves the Federal Reserve's rate path split and Iran's hardened stance on the Strait of Hormuz pushes oil higher. Traders are watching a narrow band of technical levels for a break in either direction.
Gold futures are running into selling pressure on Wednesday after testing a high of $4,500.90 and a low of $4,425.92. The metal remains unable to clear the key resistance at $4,494.66, tested a day earlier. Sticky inflation data and an Iran-linked oil standoff are behind the stall.
Core inflation matches forecasts, leaves the Fed split
Annualized U.S. consumer price growth cooled slightly in July, as expected, complicating the path ahead for Federal Reserve policymakers. Core CPI, which strips out volatile food and energy prices, rose 0.2% month-on-month and 2.5% year-on-year, matching expectations. Headline CPI eased to 3.4% year-on-year from 3.5% in June and rebounded 0.1% month-on-month after sliding 0.4% the prior month.
Following the report, investors now see a roughly 56% chance the Fed holds rates steady in September, against 44% pricing a quarter-point hike, according to CME FedWatch. Higher energy prices could keep the Fed on hold for longer, which raises the opportunity cost of holding non-yielding bullion.
Iran hardens its stance, oil edges higher
The U.S.-Iran conflict has reached its 166th day, and Iran is hardening its stance over control of the Strait of Hormuz, dashing hopes for a quick deal. Asked whether Iran currently controls the war, Naqdi said: "Certainly, victory is on our side."
As a result, oil prices are ticking higher. Brent crude rose about 1% before paring gains to trade 0.2% higher at $89.12 a barrel, on track for a sixth consecutive daily increase. WTI climbed a similar margin to $83.43 a barrel.
Gold tests key resistance and support
On the daily chart, gold futures face selling pressure signaling exhaustion likely to continue, as the inflation data failed to ease energy-driven inflation fears. A close below the psychological support at $4,444 could trigger a surge in exhaustion over the next two trading sessions.
On the 1-hour chart, gold is holding the 20 EMA support at $4,465. A breakdown there could push futures toward the 50 EMA at $4,445.61.
Source: Commodities Analysis & Opinion
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