Gold Price Outlook: $4,700 Level Holds Amid Rising US Inflation

Gold prices have stabilized near the $4,700 per ounce mark following a period of selling pressure. Despite recent volatility, the precious metal has maintained a relatively narrow range, balancing hawkish US economic data against sustained central bank demand.

Macroeconomic Drivers and Inflation

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Recent US Consumer Price Index (CPI) data revealed a 0.6% increase in April, representing the largest jump since 2023. This surge in inflation has significantly shifted market expectations; futures markets now price in a 40% probability of a Federal Reserve rate hike by year-end, a sharp rise from near-zero levels recorded in late April.

The inflationary pressure, driven largely by energy costs, has pushed US Treasury yields higher as investors demand a higher premium. Historically, rising rates and yields create a challenging environment for gold since it is a non-yielding asset. However, the current downside remains limited, suggesting strong underlying support in the market.

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Global Demand and Regulatory Shifts

Continued accumulation by central banks remains a primary pillar of support for gold prices. Conversely, physical demand from India—the world's second-largest consumer—faces headwinds after authorities increased import duties on gold and silver from 6% to 15% to protect the rupee and foreign exchange reserves.

While gold remains resilient, other precious metals show mixed results. Silver is currently trading near $86.47 per ounce, maintaining a 17% gain since the start of May. In contrast, platinum and palladium have faced downward pressure in recent sessions.

Technical Outlook and Key Levels

From a technical perspective, gold buyers must reclaim the immediate resistance at $4,708 to regain momentum. A successful breach of this level could allow for a move toward $4,771, with a secondary target situated near $4,835.

On the downside, the key support level to watch is $4,656. A break below this threshold could embolden bearish sentiment, potentially driving prices toward the $4,607 mark, with further downside risk reaching as low as $4,546.

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