
Gold and Silver Price Forecast: Weak Dollar Supports Rebound Ahead of US CPI
Gold and silver remain supported by a weak US dollar, while upcoming US inflation data and key resistance levels may determine the next move.
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Gold and silver remain supported by a weak US dollar, while upcoming US inflation data and key resistance levels may determine the next move.

The way gold continued to find buyers on dips beneath $4,000 an ounce through June and July may have been the tell that a larger move was coming, eventually culminating in the sharp breakout seen in early August. The move followed a run of supportive developments, raising the possibility that the breakout could evolve into something more significant depending on how the price action evolves from here.

The Japanese yen softened against the US dollar, even after the Bank of Japan (BoJ) flagged rising risks of faster interest rate hikes in the last meeting. The USD/JPY pair rose to 158.23, up by nearly 2% from its lowest level this month.

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Gold resumes advance on Friday after bulls paused previous day and hit new seven- high ($4371), on track for the biggest weekly gain since the third week of January.

Knowing how to trade the Consumer Price Index (CPI), one of the most important measures for inflation, is an essential skill for all types of traders, no matter their level of expertise. The CPI report has the power to shape central bank monetary policies and can send ripples through international markets.

The Dow Jones Index reached new record highs last week as strong company earnings and continued buying of AI-related stocks lifted market confidence. Reports that the Strait of Hormuz could reopen also helped improve sentiment and pushed oil prices lower.

USD/CAD opens the new week trading at its lowest level since early June, breaking lower on Friday following the release of a vastly divergent set of labour market data for July, continuing a trend seen across other economic figures over recent months.

The Australian dollar enters the week on a six-week winning streak, but the rally could face an important test from the RBA and US CPI. Markets have priced out a near-term RBA hike following softer Q2 inflation, leaving the US dollar and incoming US data increasingly important for AUD/USD.

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It's rare that the Euro isn't the major driver of the Dollar basket, because after all, it is a whopping 57.6% component of DXY. But the reality is sentiment matters, as does positioning, and if we're seeing that massive carry trade in USD/JPY unwind with USD selling and JPY gaining, well even the larger major pair of EUR/USD can be impacted.

Gold has delivered its strongest weekly advance since January after breaking decisively above a multi-week consolidation pattern, marking the most significant technical development since the March decline began. The rally has already reclaimed a major resistance zone and shifted attention toward the broader yearly downtrend, but buyers still need confirmation that this week's breakout can develop into something more durable.