The inflation print was soft enough to cool immediate fears of an aggressive repricing but not soft enough to close the door on another hike. Headline CPI rose 0.1% on the month and 3.4% year-over-year, while core CPI advanced 0.2% monthly and 2.5% annually. With the market-implied probability of a 25-basis-point September hike still near 48%, gold prices are caught between a softer dollar and an oil-driven inflation tail that refuses to fade.
CPI Report Calms Rates, but Only Halfway
The CPI report matched consensus on every line, which itself was the relief. Nothing in the data forced traders to price in a more hawkish Fed path. The 10-year Treasury yield eased to around 4.7%, off recent highs, and the dollar index softened — both tailwinds for non-yielding assets like gold and silver.
But the relief is conditional. Inflation remains above the Fed’s 2% target, and energy costs are still feeding through the rates debate. Last week’s softer payroll report argued for patience; this CPI report argues the Fed isn’t done yet. The result is a market split down the middle on September, with crude oil doing the heavy lifting on the inflation side of the argument.
Oil Prices Keep the Fed Risk Alive
Brent crude held near $89 a barrel, with U.S. WTI around $83.53, as the Strait of Hormuz remained effectively shut. Iran is demanding U.S. concessions before any full reopening, while Washington wants compensation tied to the conflict. That standoff keeps fuel costs elevated regardless of what the CPI report says about disinflation elsewhere in the basket.
The shipping stress extends beyond Hormuz. Attacks in the Bab el-Mandeb Strait continue to pressure alternative routes, and energy agencies have warned that inventory buffers are shrinking. For gold, this creates a two-sided setup: restricted Gulf shipping supports safe-haven demand, but higher crude keeps the inflation argument alive and limits how far markets can price out additional tightening. Crude, yields, and gold are now trading the same policy channel.
Equities Firmer, Technicals Set the Lines
Global equities were broadly firmer ahead of the U.S. open. S&P 500 futures rose 0.3%, Dow futures added 0.1%, and Nasdaq futures gained 0.7%. In Europe, Germany’s DAX advanced 0.47% while France’s CAC 40 slipped 0.12%. Asian trading was mixed.
On the charts, spot gold bulls need a sustained push back above the $4,430 to $4,492 resistance zone to target $4,500 and then $4,600. First support sits at $4,360, with deeper downside at $4,299 and $4,224. Spot silver faces resistance at $66.495, a break above which targets $71.38. Downside support holds at $64, then $63.11 and $61.16.
What Happens Next
Watch the September Fed meeting probability as the swing variable. If oil prices push Brent decisively above $90 and the next CPI print re-accelerates, the 48% hike odds will climb and gold’s rate-relief bid unwinds. If Hormuz reopens or crude rolls over, the Fed risk fades and gold prices have a clearer path toward $4,500. Until then, gold and silver rally on every soft data point and stall on every oil headline — a market trading two narratives at once.
— Hiro Tanaka, markets desk, AXO News