Gold (XAU/USD) & Silver Price Forecast: Can CPI Revive Gold After $4,430 Rejection?

Gold News: CPI Test Looms as China Adds to Gold Reserves

Gold and silver pricing is being impacted by the unemployment conditions in the U.S. relaxed slightly, prompting some to speculate about inflation from spiking energy prices coming out of the Middle East. Traders are focusing on the U.S. CPI set to come out this Wednesday, followed by the Producer Price Index report on Thursday, as the weakness in the last jobs report has some wondering about the room the U.S. Federal Reserve will have to adopt a more accommodating policy. Reuters reported on the 11th of August that markets are becoming more reactive to the inflation data. Will it show that energy prices are low and inflation is no longer a concern, or will energy inflation return?

Tying it all together is the real state of the geopolitical world. There have been no developments in the U.S. Iran talks to reopen the Strait of Hormuz, and Washington is demanding reparations for losses during the conflict. Disruption in the Strait has already caused the price of energy to spike, and there are concerns that inflation will remain sticky, potentially keeping the Fed Funds rate elevated, or causing the Fed to hike again, even with weak job growth. This is a dangerous scenario, particularly for precious metals, as geopolitical issues cause investors to seek safe havens, and a heightened Fed Funds rate lowers the opportunity cost of owning non-yielding precious metals.

Another reason for the bullish forecast for precious metals is the increase in demand from Central Banks. Increasing demand for gold in China has been reported by Reuters, as they stated that China bought more gold in July than they had in any month since October 2020, as they continue their diversification of reserves. The World Gold Council survey of Central Bank reserve managers shows that 89% of the managers surveyed expect to see a rise in other Central Bank gold reserves in the next year, and a record 45% expect their own Central Bank reserves to buy gold in the 12 months ahead.

Silver not only has intrinsic value, but contains additional industrial value. The Silver Institute expects 2026 to mark the sixth straight year of annual supply deficits. Despite this expected drop in supply, total industrial production is estimated to fall around 2% to roughly 650 million ounces. This is due to various solar manufacturers using less silver per panel and/or using silver alternatives. This decline is predicted to be partially offset by increased demand from the retail sector, as well as the expansion of the electric grid, cars, and electronic devices, as well as artificial intelligence.

Looking at the short-term outlook, the primary fundamental driver for August 11 is U.S. inflation. Softer than expected CPI could provide a much needed relief for metals, while unexpected high CPI coupled with strong energy could provide a justifiable case for an even tighter Fed with weaker employment figures.

Gold Technical Analysis: XAU/USD Pullback Tests Rising Channel Support Near $4,360

Gold (XAU/USD) rebound probes support of rising channel near $4,360. Gold dropped from the $4,430 area where the top of the rising channel capped the latest up move. While the latest price action has suggested profit-taking, the price is well above the 50 and 100 EMAs in the $4,296 and $4,224 areas respectively, and is in a bullish structure. The RSI is briefly in the 55 area and has eased from an overbought condition, suggesting some pressure might have been released during the price rally.

Support is in the $4,360, $4,299 and $4,224 areas. $4,368, $4,430 and $4,492 are resistance. The current structure of the silver price suggests consolidation rather than a reversal as long as the lower channel boundary is in place.

For $4,360 support to hold, I expect the channel to remain intact and a move to $4,430 possible. However, a break of $4,360 support should open further correction to the $4,299 area.

Silver Technical Analysis: XAG/USD Pulls Back Inside Rising Channel After $66 Rejection

Silver (XAG/USD) has retested the channel’s rising trend after being rejected around $66.00-$66.27. Silver price is at $64.43. Profit-taking was seen after the price action tested the upper channel boundary. Regardless, price is well above the 50 and 100 EMAs at $63.16 and $61.64 respectively. A bullish trend is in place for XAG/USD. The RSI is showing cooling momentum at 53, but was overbought previously.

I think there is support at $63.16 and $61.64. Resistance is at $64.43, $66.00-$66.27 and $68.92. Silver price at $64.43 suggests consolidation more

The price is supported by $64.00, $63.11, and $61.16. The upper limit is set by $65.21, $66.27, and $67.60. Latest trading movements indicate that buyers are not considering closing the trend and are instead willing to keep the price consolidating near support.

The bullish structure of the market is still visible as long as price holds above $63.10-$64.00. This could lead to a continuation of the trend to $65.21-$66.27. A breach of the channel is likely to lead to a deepening correction targeting $61.16.