Why softer US inflation didn’t lift metals

The US Consumer Price Index fell to 3.5% in June from 4.2% in May and slipped 0.4% month-on-month—the first drop since April 2020. Core inflation eased to 2.6% year-on-year, missing the 2.8% consensus. A weaker CPI usually eases pressure on the dollar, and the dollar index slipped to 100.76 from 100.92 the day before. Still, the MCX reacted bearishly, showing that the dollar’s modest retreat was outweighed by geopolitical risk.

Escalating US-Iran conflict fuels metal volatility

US air strikes hit Iranian targets for four straight days, and a naval blockade returned to choke shipping to and from Iranian ports. The tension pushed September Brent crude up more than 1%, hovering near $86 a barrel. Analysts warn that if energy-price shocks spill into other consumer categories, inflation could climb again, complicating the Federal Reserve’s path to its 2% target.

Technical picture on the MCX

Ravi Singh, chief research officer at a commodity-focused research house, says MCX gold is tracing a “lower highs and lower lows” pattern and sits beneath its 21-day and 55-day exponential moving averages. Those averages act as dynamic resistance; staying under them signals sustained bearish momentum. Singh flags a downside target around ₹1,36,000.

Manoj Kumar Jain of a commodity-research outfit laid out key price bands:

  • Gold: support at ₹1,41,400 and ₹1,40,650; resistance at ₹1,43,350 and ₹1,44,500.
  • Silver: support at ₹2,20,000 and ₹2,17,700; resistance at ₹2,26,000 and ₹2,28,800.

Jain advises “sell on rise” – take profit on any short-term rally – while suggesting longer-term holders might stay the course.

What to watch next

  • US-Iran developments: Any escalation or de-escalation will directly affect oil prices and, by extension, metal sentiment.

Bottom line: The MCX metal market sits between a cooling US inflation backdrop that would normally buoy gold and silver and a sharpening US-Iran confrontation that keeps risk appetite low and oil prices high. Traders who navigate this tug-of-war between macro easing and geopolitical turbulence will be best positioned to profit from the next move.