On COMEX, gold futures were up 0.35% at $4,456.70 an ounce, while silver gained 0.49% to $65.25 an ounce on August 12. Gold touched an intraday high of $4,457 an ounce, while silver rose to $65.37 an ounce.
The gains came as markets tracked fresh geopolitical developments involving Iran, the US and Yemen-aligned Houthis, alongside a North Korean missile launch. The developments kept safe-haven demand in focus and added to concerns over energy supplies through the Strait of Hormuz.
Oil prices also remained elevated. US crude rose 0.89% to $83.94 a barrel, while Brent gained 0.78% to $89.60. Both benchmarks settled more than $1 higher on Tuesday and extended their recent gains.
US CPI data in focus
Investors are also awaiting the US consumer price index data due later on Wednesday (August 12). The report could influence expectations around the Federal Reserve’s interest-rate path.
A Reuters poll expects US consumer prices to rise 0.1% in July after falling 0.4% in June. Annual inflation is expected to ease to 3.4% from 3.5%.
The inflation reading comes against a backdrop of changing expectations for US monetary policy. A softer-than-expected inflation print could support expectations of easier financial conditions, while a stronger reading could reinforce concerns about tighter policy.
Gold typically benefits from lower interest-rate expectations because they reduce the opportunity cost of holding a non-yielding asset.
Geopolitical risks add support
Precious metals have also drawn support from renewed geopolitical uncertainty.
The US and Iran remain locked in a standoff over the Strait of Hormuz, while the US and Yemen’s Iran-aligned Houthis reported separate attacks involving shipping. The latest developments have pushed oil prices higher and kept investors cautious.
Gold had already gained strongly in recent sessions. In the domestic market, gold prices rose for a sixth straight session on Tuesday (August 11), climbing ₹1,200 to ₹1.572 lakh per 10 grams, according to the All India Sarafa Association.
The rally has been accompanied by a sharp rise in silver. Domestic silver prices rose ₹2,000 on Tuesday to ₹2.42 lakh per kilogram.
Gold rally shows signs of becoming stretched
Despite the positive momentum, gold’s recent rally has also started to look technically stretched.
According to Bespoke Investment Group, gold futures have gained about 8% in August. Last week, gold posted a 7.1% weekly gain, its strongest since January.
Bespoke said gold recently moved above its 50-day moving average and entered overbought territory for the first time since March 10. On Friday (August 7) , the metal closed a full standard deviation above its 50-day moving average, ending a 103-trading-day stretch without such a reading.
Historical data cited by Bespoke suggests that after similar extended periods without an overbought reading, gold has recorded modest average declines over the following week, month and three months.
That does not indicate that gold must fall, but it highlights the possibility of greater volatility after the metal’s sharp August advance.
What to watch next
For bullion markets, the immediate focus remains on the US CPI data and its impact on Federal Reserve rate expectations. Oil prices, developments around the Strait of Hormuz and broader geopolitical tensions will also remain important drivers for safe-haven demand.
-With agencies inputs
