Gold is edging lower on Wednesday but holding above $4,000, with rising tensions in Iran and high oil prices cancelling out the boost from softer US inflation data. The metal trades at $4,027, still capped below a downward trendline.
Rising tensions in Iran and high oil prices have offset the lift that softer US inflation data would normally give gold, leaving XAU/USD edging lower on Wednesday while it holds above the $4,000 level. Price action stayed contained within Tuesday's range as the pair looked for direction.
Soft CPI fails to lift precious metals
US data released on Tuesday showed inflationary pressures eased beyond expectations in June. Yearly inflation slowed to 3.5% from 4.2% in May, well below the 3.8% market consensus, while monthly inflation contracted 0.4%, its largest decline in nearly six years.
Those figures triggered a significant repricing of Federal Reserve rate hikes and sent the US Dollar lower across the board. Precious metals, however, failed to capitalise on that weakness.
Iran tensions keep oil bid
Escalating hostilities between the US and Iran are the reason. Threats of further attacks and the closure of more energy routes are underpinning oil prices near one-month highs, which in turn fuels expectations of higher inflationary pressures and global monetary tightening.
Where the chart sits
XAU/USD trades at $4,027, still capped below the downward trendline barrier, though the Relative Strength Index (14) on the daily chart shows a bullish divergence as it reaches the neutral 40 area.
According to FXStreet, gold bulls need to break that trendline, now around $4,100 and the July 7 high, in the $4,200 area to confirm a trend shift. On the downside, supports cluster between Thursday's low near $4,020 and the late October 2025 lows around $3,885.
Source: FXStreet
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