Gold and Silver Price Forecast: US CPI Puts $4,500 and $72 in Focus

The geopolitical tensions support the safe haven assets on Wednesday. The shipping attacks in the Middle East raised fears of supply disruptions and escalation. The missile launch by North Korea increased the uncertainty. The gold (XAU) price rebounds higher to $4,400 after a slight correction on Tuesday. These risks could also support silver but its industrial demand can limit any safe-haven gains.

The rising oil prices produce a mixed outlook for gold and silver (XAG). The higher energy costs can boost inflation and demand for precious metals as an inflation hedge. But if inflation remains high, the Fed could also be tempted to keep rates up or hike them again. The increase in interest rates tends to boost bond yields which can put pressure on precious metals.

The next move in gold and silver will likely be driven by the upcoming US CPI report. A softer inflation could weaken the U.S. dollar and reduce expectations of rate hike in September. Silver can benefit more if the decline in the rate expectations also improves the economic sentiment. But the stronger inflation can support the US dollar and US Treasury yields, which can increase the pressure on precious metals despite the geopolitical risks.

Gold Eyes $4,500 as US CPI Drives the Next Move

The daily chart for spot gold shows that the price reversed on Tuesday after marking a high at $4,435. However, the price showed positive momentum again on Wednesday, which indicates that it may continue to rally toward the 200-day SMA at the $4,500 level. The RSI is also slightly below the 70 level, which indicates further upside in the short term.

But the market is now waiting for the CPI release, which may drive the next move in the gold market. The key reversal candle on Tuesday was due to the strong resistance near $4,400, which was discussed in the previous analysis.

A break above $4,500 will likely open the door for a strong rally toward the $5,000 area, which is defined by the descending trend line of the wedge formation.

The importance of the current support is also observed on the weekly chart. The chart shows that this support is defined by the ascending trend line. This line stretches from the October, 2023 low. A break above $5,000 will indicate that the bottom is confirmed and it will likely introduce a strong rally in the gold market toward new record highs.

The 4-hour chart for spot gold also shows that the price is attempting to break the key resistance at $4,370. This resistance formed the support on Wednesday. The price must remain above this level in the short term to build the strength to break the $4,435.

Silver Breaks Above $64 as Bulls Target $72

The daily chart for spot silver also shows a key reversal candle on Tuesday. But the price has already broken above the $64 area in the short term, which opens the door for a rally toward $72.

If the price continues to trade above $60, a strong move toward the $72 area is likely. The RSI also remains below the 70 level, which indicates the possibility of upside momentum in the silver market in the short term.

On the other hand, a break below the $60 level will likely push silver prices back toward the $55 and $50 areas.

The 4-hour chart for spot silver also shows strong positive structure within the descending wedge pattern. The immediate resistance in spot silver remains the $70-$72 area.

A break above $72 will likely push spot silver prices toward the $90 level. But a break below the $60 level will likely cause the price to continue dropping toward the lower boundary of the descending wedge pattern in the $50-$55 area.

US CPI Holds the Key for Gold and Silver

Gold and silver remain supported by geopolitical risks and rising oil prices. But the US CPI report will likely decide the next major move. Gold must remain above $4,300 to target $4,500. A break above $4,500 could open the way toward $5,000. Silver remains positive above $60 and could test the $70-$72 area. A break above $72 may push silver toward $90. The stronger inflation could lift the US dollar and Treasury yields and put pressure on both metals.

Read more: Weak Dollar Supports Rebound Ahead of US CPI