Fed Hike Risk Threatens Gold and Silver Price Stability

Rising Middle East tensions are keeping safe-haven demand alive for gold and silver. However, this is creating a mixed picture for precious metals as crude oil prices rose above $107 after renewed attacks that heightened concerns about supply disruptions.

The Fed's decision on interest rates will play a crucial role in determining whether the gold and silver prices continue to correct or begin a fresh rebound. If the Fed remains hawkish, it could keep inflation high, which would be bad news for precious metals.

The daily chart for spot gold shows that the price failed to break below $4,300 after Friday's inflation data. The key support zone between $4,270 and $4,300 is defined by the 50-day SMA. A break below $4,270 could lead to much lower levels toward $4,160.