Gold Prices Rebound

 

Gold Rebounds From Two-Week Low Ahead of US CPI Data and Fed Chair Warsh’s Congressional Testimony

Gold prices rebounded on Tuesday after falling to their lowest level in two weeks, supported by bargain hunting following the previous session's sharp sell-off. Investors are now turning their attention to the upcoming US Consumer Price Index (CPI) report and Federal Reserve Chair Kevin Warsh's testimony before Congress for fresh clues on the future path of US interest rates.

Persistent geopolitical tensions in the Middle East and growing expectations that the Federal Reserve could maintain higher interest rates for longer continued to shape market sentiment. Hawkish remarks from Federal Reserve Governor Christopher Waller further reinforced concerns that inflation may remain elevated, limiting the upside for precious metals.

Gold Prices Recover as Investors Await Key US Economic Events

As of 16:58 WIB, spot gold (XAU/USD) climbed 0.54% to $4,022.87 per ounce, while Gold Futures gained 0.59% to $4,029.22. Meanwhile, silver (XAG/USD) rose 0.63% to $58.02 per ounce, and platinum (XPT/USD) advanced 0.42% to $1,610.82 per ounce.

Middle East Tensions Keep Inflation Risks in Focus

Gold recovered after plunging nearly 3% on Monday, marking its steepest one-day decline in more than a month. During the sell-off, bullion briefly slipped below the psychologically important $4,000 per ounce level for the first time in three weeks.

The latest wave of selling coincided with escalating geopolitical tensions in the Middle East. US President Donald Trump announced that the United States would reinstate restrictions on Iranian shipping through the Gulf and declared Washington the "Guardian of the Strait of Hormuz," proposing a 20% transit fee on cargo passing through the strategic waterway.

The announcement significantly intensified US pressure on Tehran while raising doubts about the durability of the fragile ceasefire reached in June.

Crude oil prices extended their recent rally as traders assessed the renewed risk of supply disruptions through the Strait of Hormuz. Higher energy prices have revived concerns that inflation could remain stubbornly high, making it more difficult for the Federal Reserve to bring price growth back to its long-term target.

For gold, rising inflation presents a mixed outlook. While persistent inflation enhances gold's appeal as a traditional safe-haven and store of value, it can also strengthen expectations for tighter monetary policy. Higher interest rates typically boost US Treasury yields and the US dollar, reducing the attractiveness of non-yielding assets such as gold.

Waller's Hawkish Remarks Boost July Rate Hike Expectations

Adding to pressure on bullion, Federal Reserve Governor Christopher Waller stated that policymakers may need to raise interest rates in the near term if core inflation continues to show broad-based price pressures.

Analysts at ANZ noted that the latest escalation in the Middle East has reinforced expectations that higher energy costs could keep inflation elevated, increasing the likelihood of tighter monetary policy. According to the brokerage, financial markets are currently pricing in a 43% probability of a Federal Reserve rate hike at its July 28–29 policy meeting.

Higher borrowing costs generally reduce the appeal of gold because the precious metal does not generate interest income. Rising rates also tend to support both US Treasury yields and the US dollar, creating additional headwinds for bullion prices.

Investors are now awaiting the release of the June US Consumer Price Index (CPI) and Federal Reserve Chair Kevin Warsh's congressional testimony later on Tuesday. Both events are expected to provide critical insights into the Fed's policy outlook and could drive the next major move in gold prices.

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Gold Inflation Pressure

Gold Prices Slip as Oil Rally Fuels Fed Rate Concerns Ahead of US Inflation Data

Investing.com – Gold prices extended their decline on Monday as renewed military strikes involving the United States and Iran over the weekend pushed crude oil prices higher, reigniting inflation concerns and reinforcing expectations that the Federal Reserve could maintain a hawkish monetary policy for longer.

As of 12:05 WIB (05:05 GMT), spot gold (XAU/USD) fell 1.54% to $4,057.76 per ounce, while Gold Futures dropped 1.17% to $4,065.45 per ounce. Silver (XAG/USD) declined 2.80% to $58.19 per ounce, and platinum (XPT/USD) slipped 1.61% to $1,604.60 per ounce.

Middle East Conflict Drives Oil Higher and Revives Inflation Risks

Geopolitical tensions intensified over the weekend after the United States launched fresh strikes on Iranian targets following an attack on a Cyprus-flagged cargo vessel in the Strait of Hormuz. While Tehran announced that the strategic shipping route would remain closed until further notice, U.S. officials rejected the claim, underscoring the fragile state of ceasefire negotiations.

Oil prices remained sharply elevated after surging nearly 3%, reflecting investor concerns that escalating conflict could disrupt crude shipments through the Strait of Hormuz, a vital passage responsible for roughly 20% of global oil supplies.

The continued rise in energy prices has revived fears of another inflationary shock, increasing expectations that the Federal Reserve may keep interest rates higher for longer. Higher bond yields and a stronger U.S. dollar typically reduce the appeal of non-yielding assets such as gold.

Minutes from the Fed's June policy meeting, released last week, revealed that several policymakers still see a case for additional rate hikes, while many officials expressed greater concern over persistent inflation despite easing worries about the labor market. The Federal Reserve's next policy meeting is scheduled for July 28–29.

US CPI Report and Fed Testimony in Focus

Investors are now turning their attention to Tuesday's U.S. Consumer Price Index (CPI) report and the first congressional testimony by Federal Reserve Chair Kevin Warsh, both of which are expected to provide fresh clues on the future direction of U.S. interest rates.

According to Tony Sycamore, Market Analyst at IG, gold remains highly sensitive to both geopolitical developments and incoming U.S. inflation data.

Sycamore noted that gold found strong support near the key psychological $4,000 level last week. If prices can establish a sustained move above the $4,200–$4,220 resistance zone, it could pave the way for a broader recovery toward the 200-day moving average near $4,491.

However, he cautioned that a stronger-than-expected CPI reading could reinforce expectations for another Federal Reserve rate hike before the end of the year, boosting the U.S. dollar and placing additional downward pressure on bullion. Conversely, softer inflation data could help stabilize gold after its recent losses.

Meanwhile, the U.S. Dollar Index (DXY) edged 0.3% higher on Monday, adding further pressure on dollar-denominated gold prices.

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Gold Weekly Loss

Gold Prices Head for Weekly Loss as US-Iran Tensions Weigh on Market Sentiment

Gold prices remained largely unchanged on Friday but were on track to post a weekly loss as escalating military tensions between the United States and Iran fueled concerns over rising inflation and higher interest rates.

Meanwhile, silver and platinum were also expected to end the week lower, pressured by surging oil prices and a stronger U.S. dollar, which recovered from last week's losses.

Spot gold was little changed at $4,125.03 per ounce, while gold futures slipped 0.1% to $4,135.67 per ounce as of 09:11 GMT. The precious metal has fallen approximately 1.6% this week, reflecting cautious investor sentiment.

Gold markets have been shaken by a series of U.S. military strikes on Iran, which triggered a sharp rally in global crude oil prices. Rising geopolitical tensions have heightened concerns that energy-driven inflation could remain elevated, complicating the outlook for global monetary policy.

U.S. President Donald Trump announced that the ceasefire with Iran had ended and ordered additional military operations against the country, prompting retaliatory action from Tehran. Although an Axios report indicated that regional mediators are attempting to preserve a recently negotiated U.S.-Iran memorandum of understanding, prospects for lasting peace in the Middle East remain highly uncertain.

The surge in oil prices has intensified fears of higher inflation, increasing expectations that the Federal Reserve may maintain a more hawkish policy stance. According to the CME FedWatch Tool, markets have continued to price in greater odds of Federal Reserve interest rate hikes in 2026.

Higher interest rates typically weigh on non-yielding assets such as gold because they increase the opportunity cost of holding bullion compared with interest-bearing investments.

Other precious metals also posted weekly declines despite modest gains on Friday. Spot silver rose 0.5% to $60.2550 per ounce but remained down 4.1% for the week. Spot platinum climbed 1.2% to $1,636.14 per ounce, although it was still down 0.4% on a weekly basis.

Investors are expected to remain focused on developments in the Middle East, movements in oil prices, and upcoming U.S. economic data, all of which could influence the Federal Reserve's policy outlook and the near-term direction of gold prices.

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