Gold Price Volatility Ahead as US CPI Data Looms

The escalating conflict between the US and Iran has increased the risk of inflation. The recent attacks on shipping vessels in the Strait of Hormuz have raised concerns about continued disruption in oil supplies, which can lead to higher transport and production costs.

This, in turn, may sustain inflation and affect gold prices. Geopolitical risks typically attract buyers to gold, but the prospect of higher interest rates works against this support. The market is now waiting for the US CPI data release on Friday, which could have a significant impact on gold prices.

The daily chart for spot gold shows negative price action in the short term. The price dropped after the US PPI data and fell 1.90% on Thursday. The strong negative candle for Thursday indicates weakness in gold in the short term. The 50-day SMA near $4,270 remains the immediate support for spot gold.

If the price drops into the $4,250 area and then recovers to close above $4,350, it will likely form a bottom and push price back toward $4,530. However, the RSI remains below the midline, indicating negative price action in the short term.