Inflation Data Adds Uncertainty to Fed’s Next Move
The latest U.S. Consumer Price Index (CPI) report showed a 0.5% monthly increase in January, exceeding the 0.3% forecast. Year-over-year inflation rose to 3%, while core CPI climbed to 3.3%.
This data reinforces expectations that the Federal Reserve will maintain elevated interest rates, which could limit gold’s rally. Higher rates often boost yields and the dollar, making gold less attractive.
Traders now await Thursday’s Producer Price Index (PPI) release for further insights into inflation trends. A higher-than-expected PPI could strengthen the dollar and weigh on gold prices, while weaker data might extend gold’s gains.
Silver Follows Gold’s Path Amid Dollar Weakness
Silver (XAG/USD) mirrored gold’s upward movement, reaching $32.39 before settling at $32.32. The metal benefited from a weaker dollar and falling bond yields, which increased its appeal for industrial and investment purposes.
Silver prices have surged nearly 7% this month, supported by growing concerns over global trade tensions and robust demand from the renewable energy sector.
“Silver’s momentum is largely driven by industrial demand and safe-haven flows,” said Emily Johnson, a senior metals strategist. “The weaker dollar and potential supply disruptions from trade barriers are key factors supporting the current rally.”
Gold (XAU/USD) is trading at $2,920, maintaining a bullish stance after bouncing off its pivot point at $2,906.11. The 50-day EMA at $2,890.45 is reinforcing support, aligning with an upward channel that has kept buyers in control.
A bullish engulfing pattern signals renewed strength, with immediate resistance at $2,942.81 in focus. A break above this level could drive prices toward $2,973.33, extending the rally.
On the downside, $2,906.11 remains a key threshold—a drop below could expose $2,864.78 and further downside toward $2,834.65. The broader trend remains positive, but traders should watch for volume confirmation near resistance.
Holding above the 50 EMA strengthens the case for further gains, while a breakdown could invite selling pressure.