Core CPI Surprise Lifts Gold to $4,377 as Fed Hike Odds Remain High

Spot gold climbed to $4,377.40 per ounce, a 1.38% gain, in early U.S. trading on Friday. Spot silver rose 2.12% to $64.945. The move follows an August core CPI print that exceeded forecasts. Headline inflation held steady at 3.4% year-over-year. Core inflation rose 0.3% month-over-month, above the 0.2% expected by analysts. The annual core rate slowed to 2.4% from 2.5%. This data keeps the probability of a Federal Reserve rate hike on September 15-16 in the upper 60% to low 70% range. Traders remain cautious about betting against higher rates for longer.

The market is pricing metals as a rates and dollar trade rather than a pure safe-haven asset. The 10-year U.S. Treasury yield is holding near 4.95%. The U.S. dollar index is firmer. These factors limit the upside potential for gold and silver. The technical setup for gold shows bulls targeting a move above $4,375.00. Bears are watching for a break below $4,288.00. For silver, resistance sits at $64.48 and $65.61. Support levels are identified at $62.55 and $61.37.

Geopolitics and oil prices drive inflation risks

The Strait of Hormuz remains a key factor for oil and inflation expectations. The U.S. has made progress in restricting Iranian exports, but the situation is not resolved. Brent crude settled at $107.63 per barrel on Thursday. WTI crude closed at $102.48, their highest levels since May 19. Crude prices dipped slightly on Friday but remain above $100. This sustains the inflation channel and supports the case for further Fed tightening. Progress in the region reduces immediate haven demand for gold. However, high energy costs keep pressure on the Fed rate outlook.

Global markets react mixed to inflation data

U.S. stock-index futures were firmer after four consecutive losing sessions. Risk appetite remains fragile due to the rates reaction. European markets were mixed to weaker. Investors weighed higher energy costs and the ECB’s 25-basis-point rate hike. Asian markets showed mixed results. Bond yields and crude prices continue to set the cross-asset tone. The data from GN auto markets/commodities: silver prices highlights the sensitivity of precious metals to macroeconomic shifts. The interplay between dollar strength and real rates remains the primary driver for precious metals performance.

Technical levels define next price targets

Gold bulls aim to push prices above the $4,375.00 level. A sustained move could target $4,435.00. Bears seek a break below $4,288.00. Deeper downside targets include $4,254.00 and $4,218.00. First resistance for gold is at $4,341.00. First support is at $4,288.00. Silver bulls target a move above $64.48. Further gains would target $65.61 and then $66.70. Bears look for a break below $62.55. Deeper targets are at $61.37 and $60.87. These levels will guide trading strategy into the Fed decision.