Gold (XAUUSD) and Silver Technical Analysis: Inflation Data Boosts Bullish Outlook

The latest US inflation data showed a mild increase in consumer prices for July. The Consumer Price Index increased 0.2% month-over-month, slower than the 0.3% increase in June, as shown in the chart below. However, annual inflation remained steady at 2.7%, the same reading as in June.

The modest increase in core CPI by 0.3% suggests that underlying price pressures remain, but not at alarming levels.

The softer CPI reading adds to the bullish setup by easing pressure on the Federal Reserve to maintain high rates. A shift toward monetary easing would weaken the dollar and make gold (XAUUSD) more attractive to investors seeking a hedge.

Moreover, the gold market is supported by geopolitical uncertainty, as markets are watching the US-Russia talks in Alaska. A lack of progress could spark renewed safe-haven flows into gold.

On the other hand, the market is waiting for the US data, including the Producer Price Index, weekly jobless claims, and retail sales. The weaker data could strengthen the case for a September rate cut and add fresh momentum to gold’s advance.

Gold Technical Analysis

XAUUSD Daily Chart – Bullish Price Action

The daily chart for spot gold shows that the price is consolidating within the orange zone above the $3,250 level. As long as the price remains above $3,250, the likelihood of a breakout above the red zone is higher.

A break above $3,500 will initiate a surge in gold prices toward new highs. However, a break below $3,250 will push gold prices toward the green zone, which lies between $3,250 and $3,100. As long as the price remains within this green zone, the intermediate-term outlook for gold remains strongly bullish.

XAUUSD 4-Hour Chart – Consolidation

The 4-hour chart for spot gold shows that the price is consolidating between the $3,250 and $3,450 levels. A break above $3,450 will likely push the price toward $3,500, while a break above $3,500 will initiate a strong surge in gold prices. This consolidation suggests that gold is preparing for its next move toward the $3,400 level.

Silver Technical Analysis

XAGUSD Daily Chart – Bullish Reversal after Inflation Data

The daily chart for spot silver (XAGUSD) shows that the price is consolidating above the long-term support at the $35 level. A breakout above $35 has opened the door for a move toward the $42–$43 region.

As long as the price remains above the 50-day SMA, the short-term outlook for silver remains strongly bullish. The release of inflation data has triggered a bullish reversal in silver prices and signals further upside potential.

XAGUSD 4-Hour Chart – Bullish Price Action

The 4-hour chart for spot silver shows that the price is consolidating above the orange support zone at $34.50. The price action is forming a strong bullish pattern above this zone, indicating that silver prices are likely to continue higher.

US Dollar Index Technical Analysis

US Dollar Daily – Negative Price Action

The daily chart for the US Dollar Index shows a sharp upper shadow on Monday. The index moved lower after the release of inflation data, indicating that it is likely to continue declining in the next few days. As long as the index remains below 100.50, the next direction will likely be downward.

US Dollar 4-Hour Chart – Negative Price Action

The 4-hour chart for the USD Index shows the formation of an ascending broadening wedge pattern, which signals bearish price action. The price has been trading with a bearish bias below the red dotted trend line. The decline following the inflation data suggests that the next direction for the USD Index will likely be lower.