Gold and Silver Rally as Soft CPI Data Cools Rate Hike Expectations

Headline CPI fell 0.4% in June, marking its most significant monthly drop since April 2020 and dragging the annual rate down to 3.5%. This shift in inflation data prompted traders to recalibrate their expectations for Federal Reserve policy, with the probability of a July rate hike sliding to 15.5%. With core CPI remaining unchanged on the month, the 10-year Treasury yield retreated to 4.58%, offering a reprieve for non-yielding assets like bullion.

Spot gold climbed to $4,052.80, successfully moving back above the $4,000 mark, though it remains below the resistance band between $4,091 and $4,140. Silver followed a similar trajectory, trading at $58.65. While precious metals found support in the macroeconomic data, broader markets navigated a complex landscape of energy-risk premiums. Crude oil remained bid due to ongoing tensions in the Strait of Hormuz, where the U.S. continues to monitor military and commercial shipping activity. Investors are now looking toward Fed Chair Kevin Warsh’s upcoming Senate testimony for further clarity on the central bank’s trajectory, balancing the bullish potential of falling yields against persistent geopolitical volatility.