Gold (XAUUSD) & Silver Price Forecast: CPI in Focus as Ceasefire Holds — Gold to Support at $4,100, Silver Nears $63.50?

Gold and Silver Hold Firm in Anticipation of CPI Report

Investor focus is currently on precious metals, as market tension heightens with the U.S. Bureau of Labor Statistics’ (BLS) release of May CPI numbers set for Tuesday morning. A consensus forecast puts headline CPI inflation in May at around 0.5% month-over-month, increasing the year-on-year rate to about 4.2% from April’s 3.8%.

This increase will largely come from rising energy prices, amid ongoing fallout from Iran’s conflict and the current price of crude oil. On the core CPI front, the expected gain is around 0.3% per month, which would indicate persistent inflation pressures and reduce chances of a monetary policy shift by the Federal Reserve sooner rather than later.

The May CPI release today is more than just a number for gold and silver. It is a test to see whether the bullion markets will be able to support an inflation environment where rate hikes are in play.

On the other hand, it also tests the strength of central bank gold buying as well as the structural drivers of gold and silver, which include fiscal deficits, mining supply growth limits and demand from the industrial sector, especially in the case of silver.

Gold Spot $4,176 is the Daily Down Channel Breakdown Continues

Gold Spot currently sits at $4,176 on the 1D chart. Sharp red continuation candles smashed below the blue support area and red 50MA at $4,358 forming very strong bearish engulfing candles with very long lower wicks. A fresh lower low was confirmed with the current price from the high at $4,595 which confirms decisive distribution after failing overhead trendline resistance.

Price is now heading down toward a Fib extension level zone of $4,103-$3,883 with RSI sitting below 40 which shows the momentum is continuing to the downside. Looking at the volume profile there is a heavy supply level at the $4,450-$4,595 level as shown on the right with a white descending trendline from February highs which is holding down the price from any serious up moves.

Looking at price action as a whole I feel that price is currently very bearish below $4,358 and is inside of an extended downchannel from $5,400 high with price now having very strong lower highs and lower lows forming with sellers completely in control.

Trade Idea: Short $4,176 towards $4,103, stop $4,250

Silver Spot Plunges to $64.17 – Red MA Rejection on 4h

Silver Spot is trading at $64.17 on the 4h chart. Strong red candles have rejected the red 50MA at $72.90 and also broke the lower blue trendline level. This has formed a strong bearish continuation candle with fresh lower lows forming in the price as well and a heavy distribution candle formed from the $70 level which can be seen on the 4h. RSI also dropped strongly below the 40 area which confirms that there is a momentum shift to the downside.

Looking at the volume profile on the right, it is shown that $69-$72 was an area of failed fair value which is a very strong supply area where sellers were able to easily outbid buyers to form the distribution candle. Price will now likely continue to the downside towards a Fib confluence level zone at $63.39-$61.08.

The structure is clearly very bearish now below $72.90 and price is continuing to drop lower inside of the broader descending channel from recent highs. Higher lows failed completely, showing aggressive seller pressure with minimal buyer interest on bounces.

Trade Idea: Short $64.17 towards $63.39, stop $65.50.