Gold Weekly Forecast

Forecast

Gold ended the week under pressure as higher US Treasury yields and a stronger US Dollar outweighed safe-haven demand from renewed Middle East tensions. Rising oil prices increased inflation concerns, leading markets to expect the Federal Reserve to keep interest rates higher for longer, reducing the appeal of non-yielding gold. Next week’s direction will largely depend on US inflation data (CPI & PPI), Retail Sales, and Fed Chair Kevin Warsh’s testimony, which could reshape rate expectations.

Key Numbers to Watch

• US CPI (June): Consensus +0.3% MoM, 2.9% YoY
• Core CPI: +0.3% MoM, 3.0% YoY
• US PPI: Expected +0.2% MoM
• US Retail Sales: Expected +0.2% MoM
• Fed Funds Rate: 3.50%–3.75%
• Market-implied probability of a September Fed rate hike: ~62%
• Spot Gold: Around $4,100–4,120/oz at the end of the week.

Bottom line: Gold remains fundamentally supported by geopolitical risks, but US inflation and Federal Reserve expectations are the dominant drivers. A hotter-than-expected CPI would likely strengthen the USD and pressure gold, while softer inflation could revive bullish momentum.

Gold Near $4,100 as Stronger Dollar Limits Upside

Gold is trading near $4,100 and is on track for a 1.7% weekly decline. Higher oil prices, Iran tensions, and expectations of tighter monetary policy have weighed on precious metals. Markets remain cautious as reports suggest the US and Iran may resume nuclear talks. A firmer US Dollar, with the DXY nearing 101.00, is also limiting Gold’s upside.

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ECB Inflation Path and French Growth Support Euro Outlook

The ECB aims to reduce inflation to its target in about three years, highlighting a cautious approach to monetary policy. The French Central Bank has revised its second quarter growth forecast to 0.2%, indicating resilience in the economy. This improvement may benefit the overall euro area performance

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ECB Inflation Outlook Supports Euro and Rate Expectations

The recent ECB minutes highlight that inflation is likely to stay significantly above the 2% target until at least mid-next year. Core inflation is also anticipated to remain above 2% throughout the entire forecast period, even with the ongoing tightening of monetary policy. 

Traders should watch for how this persistent inflation could influence European market sentiment and the €’s performance against major currencies. The continued focus on inflation may lead to a more cautious approach from the ECB, impacting interest rate expectations.

In conclusion, inflation pressures may influence monetary policy direction.

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Oil Prices Volatile Amid US-Iran Ceasefire Hopes

In the Strait of Hormuz, ongoing exchanges of attacks between the US and Iran continue to disrupt shipping routes. This situation creates challenges for the global economy while providing support for crude oil prices, appealing to oil bulls.

Conversely, President Trump has indicated that Iran has requested a ceasefire. Historically, such comments from him have signaled a preference for de-escalation and negotiating a resolution. As a result, oil prices are currently under pressure and could drop further unless a major escalation occurs.

Current volatility in oil prices hinges on US-Iran relations and potential ceasefire developments.

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