Gold Holds Above $4,400 Near Two-Month High as Traders Await U.S. CPI
Gold (XAU/USD) maintained a bullish tone above the $4,400 level during the first half of the European session, remaining close to its highest level since June 5, reached on Tuesday. Traders are now awaiting the release of the U.S. Consumer Price Index (CPI) report for fresh clues about the Federal Reserve’s future policy path amid inflation risks stemming from volatile oil prices. The data could influence the U.S. Dollar (USD) and provide a significant catalyst for the non-yielding precious metal.
Gold is trading around its 100-day Simple Moving Average (SMA), but remains capped below a strong resistance zone. The area begins with the 50.0% Fibonacci retracement of the April–June decline and extends toward the 200-day SMA at $4,500.51. This suggests that buyers need a decisive breakout above this zone to regain control of the market.
On the downside, immediate support is provided by the 100-day SMA at $4,388.33. Additional support levels are located at the 38.2% Fibonacci retracement at $4,298.48 and the 23.6% retracement at $4,161.40. A sustained break below these levels could expose the broader base around $3,939.81.
Oil Prices Rise as Hormuz Reopening Hopes Fade
Ahead of the key U.S. inflation data, oil prices remained firm near their highest level in one and a half weeks as expectations for an imminent reopening of the Strait of Hormuz faded.
Mojtaba Khamenei, an adviser to Iran’s Supreme Leader, said the strategically important waterway would not reopen until the United States met Tehran’s demands. At the same time, Iran-backed Houthi rebels in Yemen intensified attacks on vessels in the Red Sea and Bab el-Mandeb, particularly targeting ships linked to Saudi Arabia.
The latest developments have kept the geopolitical risk premium elevated and supported crude oil prices, adding to concerns about inflation and potentially complicating the Federal Reserve’s interest-rate outlook.
Analysts at Commerzbank highlighted that hopes for a new agreement between Iran and the United States and a reopening of the Strait of Hormuz have weakened following a hardening of diplomatic positions over the weekend.
The bank noted that Iran has established conditions for reopening the strait, including demands for reparations, while U.S. President Donald Trump has responded with additional demands for compensation for victims of the conflict.
According to Commerzbank, the escalation in mutual demands highlights the declining likelihood of a near-term agreement to restore full transit through the key shipping corridor. This, in turn, reinforces the risk premium currently embedded in energy markets.
Fed Rate Expectations Keep USD Supported
The geopolitical backdrop is offsetting signs of cooling in the U.S. labor market and strengthening expectations that the Federal Reserve could raise interest rates.
According to the CME Group FedWatch Tool, traders are still pricing in a probability of more than 75% that the U.S. central bank will raise borrowing costs at least once by the end of the year.
This outlook continues to support elevated U.S. Treasury yields. Combined with persistent geopolitical uncertainty, higher yields could strengthen demand for the U.S. Dollar as a safe-haven asset and potentially limit further gains in gold.
Meanwhile, tensions in Asia added another layer of geopolitical risk. North Korea launched ballistic missiles early in the day, just days before a major joint military exercise involving South Korea and the United States.
Taiwan also criticized plans for naval exercises between China and an Indonesian warship off the island’s eastern coast.
The combination of geopolitical tensions, elevated Treasury yields, and USD strength could encourage caution among gold buyers and make it difficult for XAU/USD to extend the strong bullish momentum seen over the past week.