Gold Spot Price $6197.77

Silver Spot Price $91.96

Platinum Spot Price $2476.16

US inflation is back in focus, with the latest Consumer Price Index report expected to show prices rising by a modest 0.1% for the month. This would place annual inflation at approximately 3.4%, slightly below the previous reading of 3.5%, but still well above the Federal Reserve’s 2% target.

The headline figure will only tell part of the story. Core inflation, which removes the more volatile food and energy categories, is expected to rise by around 0.2% for the month while easing to approximately 2.5% annually. If the forecasts prove accurate, the report would suggest inflation is continuing to cool, albeit slowly and unevenly.

Energy remains the wild card. Falling petrol prices helped drive the previous monthly CPI result lower, but oil has since climbed as tensions between the US and Iran continue to place pressure on the Strait of Hormuz. If energy prices remain elevated, the relief seen in the previous inflation report may prove temporary, with higher transport and production costs eventually flowing back through to consumers.

The Federal Reserve held interest rates at between 3.50% and 3.75% at its July meeting, although three policymakers reportedly supported an increase. That division highlights the difficult position facing the central bank. Moving too early risks placing unnecessary pressure on households, businesses and employment, while waiting too long could allow inflation expectations to become entrenched again.

A result close to expectations may give the Fed room to wait for another month of data. A hotter reading, however, could quickly increase the likelihood of a September rate rise and place renewed pressure on sharemarkets, particularly highly valued AI and technology companies. US Treasury yields and the dollar are already responding to the uncertainty, suggesting investors are becoming more cautious ahead of the release.

Gold and silver have meanwhile recovered their recent losses remarkably quickly. Gold climbed by almost US$400 in just four trading days and has moved back above its 50-day moving average, restoring some confidence after an extended period of softer trading.

The break above the 50-day average is technically encouraging, but the next move may depend heavily on inflation and interest-rate expectations. Higher inflation can support gold as investors seek protection from declining purchasing power, although the prospect of higher interest rates can strengthen the US dollar and make non-yielding assets such as gold less attractive.

This leaves precious metals caught between competing forces. Continued volatility surrounding Iran, uncertainty over stretched AI stock valuations and renewed inflation pressure could strengthen safe-haven demand. At the same time, a more aggressive Federal Reserve could interrupt the recovery.

For now, gold’s rapid rebound suggests investors are once again looking for protection. Whether it continues higher will likely depend on whether the CPI report confirms inflation is gradually coming under control, or signals that the Federal Reserve may already be falling behind the curve.

Enjoy today’s charts

Gold daily chart, with 50MDA