Saad Ullah
Gold prices are having a pretty solid day in early U.S. trading after the latest inflation report basically said "nothing to see here, folks." The precious metal is catching a bid while silver's being a bit more stubborn and staying slightly down.
Gold (XAU) Catches a Break as May CPI Numbers Don't Freak Anyone Out
So the big economic data drop of the week just hit – the May consumer price index – and honestly, it was about as boring as gold bugs could've hoped for. The CPI came in at 2.4% year-over-year, which was exactly what everyone was expecting and just barely up from April's 2.3%. Nothing scary, nothing surprising, just nice and steady.
What's even better for gold (XAU) is that core CPI (that's the one that strips out all the crazy food and energy swings) stayed flat at 2.8% year-over-year. Same as last month, same as what analysts were calling for. This is the kind of data that makes Fed officials sleep well at night and doesn't give them any reason to start getting trigger-happy with interest rate hikes.
August gold was trading at $3,354.40, down just $0.40 from yesterday, while July silver managed to squeeze out a tiny gain of $0.034 to hit $36.835. The fact that gold (XAU) is basically holding steady after such a major data release shows there's some real demand underneath all this action.
Markets Are Feeling Pretty Good Right Now, and Gold (XAU) Is Along for the Ride
The inflation numbers weren't the only thing putting smiles on traders' faces today. Asian and European stocks were looking decent overnight, and U.S. futures were already pointing higher before they got an extra bump from the CPI data. There's definitely some "risk-on" vibes in the air, but gold (XAU) isn't getting left behind, which is pretty cool to see.
Here's what really got people excited though – word came out that the U.S. and China apparently hammered out some kind of framework to fix their trade relationship after two days of talks in London. Nobody's spilling the details yet, but just hearing that these two economic heavyweights are actually talking instead of throwing trade punches at each other is enough to get markets pumped.
But let's be real – it's not all good news out there. The World Bank just dropped a pretty grim forecast saying U.S. economic growth could get chopped in half because of all this tariff and trade war nonsense. They're calling for just 1.4% GDP growth in 2025, which is a massive drop from the 2.8% we saw in 2024. Plus, they cut their global growth forecast from 2.7% down to 2.3% for this year. This kind of uncertainty is exactly why smart money keeps flowing into gold (XAU) as a safety net.
Gold (XAU) Bulls Are Still Running the Show Despite Today's Small Dip
From a technical perspective, August gold futures bulls are totally in the driver's seat right now. The analysts are calling it a "firm overall near-term technical advantage," which is trader-speak for "the uptrend is alive and well." The next big prize for the bulls is getting a close above that tough resistance at last week's high of $3,427.70. Break through there, and we could see some serious fireworks.
The bears would need to do some heavy lifting to change this story – they'd have to push gold (XAU) below the solid support at $3,250.00, and that's a pretty big ask from current levels. First resistance is sitting at this week's high of $3,370.40, then there's another wall at $3,400.00.
On the downside, traders are keeping an eye on the overnight low of $3,335.40 as the first place where buyers might step in, with another support level at $3,325.00. The fact that gold (XAU) is hanging tough above these levels even on a mixed day shows the underlying strength is still there. With a Wyckoff Market Rating of 7.0, the technical picture is looking pretty solid for more upside.
Meanwhile, the U.S. dollar index is taking a small breather and trading slightly lower, which is always good news for gold since they usually move in opposite directions. Oil futures are having a decent day around $66.00 a barrel, and the 10-year Treasury yield is sitting at 4.456%. We've still got more economic data coming today – MBA mortgage applications, real earnings, energy stocks report, and the Treasury budget statement – so there could be more action ahead for gold (XAU) depending on what those numbers look like.
Saad Ullah
