After the cooling U.S. July Consumer Price Index (CPI) print, market expectations for a Federal Reserve interest rate hike in September retreated markedly, dragging U.S. Treasury yields lower. Spot gold and silver both rallied during the U.S. trading session on Wednesday (August 12).
Spot gold closed Wednesday with a steep gain of $40.36, or 0.92%, settling at $4408.15 per troy ounce.
Spot silver finished the session at $65.304 per troy ounce, up 0.99%.
## Cooling Inflation Data Dials Back Rate Hike Bets
Latest figures showed U.S. headline CPI rose 0.1% month-on-month and 3.4% year-on-year in July; core CPI (excluding food and energy) climbed 0.2% month-on-month and 2.5% year-on-year. Post-data, the market’s probability pricing for a September rate hike fell to roughly 40%, down sharply from around 48% on Tuesday.
Meanwhile, the 10-year U.S. Treasury yield pulled back to approximately 4.68%, and the 2-year yield slipped to around 4.20%.
Market participants noted the data lent support to both equities and gold, yet it did not trigger a full dovish repricing. PeRSIstent energy-driven inflation risks remain the primary factor preventing the market from fully ruling out another rate increase this year. As such, the bull case for precious metals is still constrained by conflicting rate expectations and inflation fears.
## North American Equities Mostly Closed Higher
Most North American stock indexes advanced on Wednesday. The S&P 500 rose 20.30 points (+0.3%) to 7748.50; the Nasdaq Composite gained 143.04 points (+0.5%) to 26588.49; the Dow Jones Industrial Average edged down 21.58 points (less than 0.1%) to 53770.27; the Russell 2000 added 18.37 points (+0.6%) to 3045.48.
European markets traded weaker. France’s CAC 40 fell 0.46% to 8674.94; Germany’s DAX dipped 0.17% to 26346; the UK FTSE 100 eased 0.10% to 10833; the Euro Stoxx 50 lost 0.24% to 6535.
## Geopolitical Risks PeRSIst in the Strait of Hormuz
Beyond U.S. inflation data, the Strait of Hormuz remains a critical geopolitical chokepoint swaying oil prices, inflation expectations and safe-haven demand. No deal has been struck between the U.S. and Iran to reopen the waterway. Iran’s top national security official has tied the strait’s reopening to U.S. concessions including asset unfreezing and de-escalation of regional conflicts. Shipping through both the Strait of Hormuz and Bab el-Mandeb continues to face restrictions.
The International Energy Agency (IEA) warned that spare inventory buffers are being depleted rapidly and downgraded supply forecasts for the rest of the year. Analysts pointed out that while falling yields benefit non-yielding gold, elevated oil prices stemming from Middle East shipping bottlenecks could dampen bets on rapid Fed policy eASIng and cap a one-sided rally in precious metals.
## U.S. Dollar and Treasury Yields Remain Core Variables
In commodity markets, Nymex WTI crude traded around $83.20 per barrel, and Brent crude hovered near $88.92 per barrel. The U.S. Dollar Index rebounded late in the session, recouping part of its losses after the CPI release, while the benchmark 10-year Treasury yield traded around 4.7%. Markets are closely watching that renewed dollar strength could weigh on dollar-denominated gold, whereas a sustained decline in yields would underpin precious metals prices.
## Key Technical Levels for Gold and Silver Laid Out
From a technical perspective, spot gold bulls target reclaiming the $4430.00 – $4492.00 resistance zone. A sustained breakout would open upside toward $4500.00 and $4598.48. On the bearish side, a break below $4360.00 would trigger a drop to $4299.00 followed by $4224.00. Immediate primary resistance stands at $4430.00, secondary resistance at $4492.00; initial support is $4360.00, secondary support at $4299.00.
For spot silver, bulls aim to break back above $66.495, with subsequent targets at $71.38 and $74.63 on a decisive push higher. If bears drive prices below $64.00, the downside targets fall sequentially to $63.11 and $60.83. Silver’s first resistance level is $66.495, next at $71.38; immediate support is $64.00, followed by $63.11.