Gold Price Trend Forecast: Why Did Gold Prices Fall After US CPI Cooled? Fed Chair Speech and Iran Situation Become Obstacles

TradingKey - As of the Asian trading session on July 15, gold ( XAUUSD) prices fell back to fluctuate near $4,030, erasing nearly all of the gains driven by yesterday's positive CPI data. Looking at the chart, gold was briefly boosted yesterday by the cooling US June CPI, rebounding quickly to test near $4,100. However, the bulls failed to sustain their momentum today, indicating a fierce battle between bulls and bears at the current level.

CPI Cooling Supports Gold, But Warsh’s Cautious Remarks and US-Iran Escalation Limit Rebound

From a fundamental perspective, the current gold market is characterized by a coexistence of bullish and bearish factors. On the one hand, weaker-than-expected US inflation data eased the Federal Reserve's short-term rate-hike pressure; on the other hand, the US-Iran situation continues to deteriorate, and rising oil prices have reignited inflation concerns, coupled with Federal Reserve Chairman Kevin Warsh's speech failing to deliver a clear dovish signal, leaving gold under pressure once again.

The latest US CPI data for June showed that the US year-on-year CPI growth fell back to 3.5% from 4.2% in May, with the decline in inflation beating market expectations. More importantly, core inflation also moderated, indicating that price pressures do not rely entirely on falling energy prices, but rather reflect that prices of some core goods and services have also begun to cool. Following the release of the data, the market quickly scaled back expectations for a July rate hike by the Federal Reserve, driving gold prices up rapidly in the short term, with intraday prices briefly touching $4,100.

However, the bullish sentiment brought by the CPI did not continue to build. This was because Federal Reserve Chairman Warsh's speech at a congressional testimony did not send a clear dovish signal to the market. Warsh acknowledged that the June CPI data was softer than expected, but at the same time emphasized that the inflation problem cannot be declared solved based on a single month of improvement. He stated that the Federal Reserve still needs more data to judge whether price pressures are truly back on a sustainable cooling path, and reiterated that achieving price stability remains the core of policy.

Analysts believe that Warsh's speech re-emphasized policy uncertainty. Especially against the backdrop of the Federal Reserve still refusing to provide clear guidance on the interest rate path, investors are reluctant to excessively bet on a one-sided rise in gold, subsequently causing gold prices to fall back under pressure.

More crucially, the further escalation of the US-Iran situation has brought additional downward pressure to gold prices. Trump reportedly convened his national security team in the White House Situation Room on Tuesday to discuss options for a larger-scale military action against Iran. The plan could exceed the current scope of limited strikes around the Strait of Hormuz, indicating that the US is considering further expanding its military pressure on Iran.

Gold Price Trend Analysis: $4,100 Becomes Important Short-Term Resistance for Bulls, $4,000 Remains Key Support

Gold Price Daily Chart, Source: TradingView

Looking at gold's daily chart, gold briefly surged to $4,100 yesterday, boosted by the favorable CPI data, but its closing price failed to hold above that level, settling at $4,053. This indicates a lack of willingness among short-term bulls to chase the rally. Today, the gold price has continued its downward trend, further illustrating the weak buying momentum in the market.

Currently, $4,100 has become an important resistance level for short-term bulls. Only by reclaiming and holding above $4,100 can gold's bullish momentum be strengthened, opening up the upside potential toward $4,200.

For downside support, key attention should be paid to the $4,000 mark. This level is not only an important psychological support but also a core battleground repeatedly contested by bulls and bears recently. If this level is lost, the gold price could fall further back toward the $3,900 support level, and a continued decline could open up room for further downside toward $3,500.