Gold (XAUUSD) & Silver Price Forecast: Truce Stability vs CPI Pressure — Next Bounce for XAU & XAG?

Gold and Silver Retain Structural Allure Post-CPI

On June 11, markets for gold and silver continued analyzing yesterday’s more elevated-than-anticipated May CPI report, indicating an increase in headline inflation to 4.2% year-over-year, from 3.8% in April. That acceleration came largely due to a spike in energy prices following disruptions in the Persian Gulf region, while core inflation stayed sticky as policymakers expect that the Federal Reserve will refrain from cutting rates for longer than anticipated given the elevated levels of inflation.

Despite these economic headwinds, both gold and silver remain underpinned by solid fundamentals as central banks purchased a net 244 tonnes of the precious metal during the first quarter of the year. Buying figures in April and May haven’t been publicly released, but reports indicated that much of that continued purchase of the yellow metal was done by central banks in China. Central banks are diversifying their reserves away from more traditional currencies due to the geopolitical instability.

Additionally, growth in gold supply from mining has been slow in recent years; global gold production is nearly 10% below the record highs achieved back in 2017. On top of central bank buying and low production, gold continues to be a safe haven asset due to the geopolitical uncertainty in the world and large sovereign debt and fiscal deficits in the major economies.

For silver, the market benefits from strong industrial demand as well as investment demand, both of which are projected to remain healthy for years due to the widespread use of the metal in renewable energy generation, as well as in the electronics and semiconductor industries. On top of that, production of silver has been slow.

For both metals, today’s headlines provide a tug-of-war between the immediate concerns of monetary hawkishness and inflation versus the longer-term themes of central bank demand, constrained supply and geopolitical instability. As a result, investors look at any decline in prices since the CPI release as potential entry points.

Gold Spot Rebounds to $4,089 – Fib 0.236 Defense on 2h

Gold Spot at $4,089 on 2h chart. Green candles that continued defended 0.236 Fib retrace of 4104 after sell off from $4364. Red 50 MA of 4194 above caps price. Blue line of downtrend resistance in place. Red and green wicks indicate buyers taking the dip.

Green and red bodies are relatively small. RSI of 48 is neutral. No strong divergence. Volume profile is showing 4100-4154 area as pivot area. 4154 and below in downtrend pattern of the 4575 highs and below is neutral to bearish. Price is likely to test Fibs at confluences with lines of downtrend.

Trade Idea: Buy $4,089 targeting $4,154, stop $4,040.

Silver Spot Holds $64.18 – Blue Support Retest on 1D

Silver Spot is 64.18 on 1d chart. Green candles of consolidation recently retested blue long-term line of support in region of 62.15 after sell off from 72.77 highs. Red MA of 68.54 overhead. 236 and 382 Fibs circled show confluences as price nears support.

Green and red wicks have made lower highs. Buyer support at 62.15 is in place. RSI of 45 indicates price is stabilizing in 62-66 area. Volume profile shows accumulation in 62-66 range.

Structure is neutral to bearish on 1d in 68.54 and below in extended downtrend from February highs. Strong resistance on higher timeframe in 70.50 range.

Trade Idea: Buy $64.18 targeting $66.01, stop $62.15.