Gold edges up 0.4% from monthly low as soft dollar supports recovery

Gold rose to around $4,020 per ounce on COMEX, up 0.4% from the monthly low, as a weaker US dollar following softer-than-expected June CPI data provided short-term support for the precious metal.

"The tactical backdrop for gold has improved modestly after the CPI miss, but the dollar's structural uptrend remains intact," said Ole Hansen, head of commodity strategy at Saxo Bank. "Until we see a confirmed break above $4,194, any rally remains corrective."

The US Dollar Index traded at 100.52, down 0.07% on the session, after June CPI registered its first monthly decline in six years. The data reduced expectations of a July Federal Reserve rate hike, pressuring the dollar. However, Fed Chair Kevin Warsh reiterated that returning inflation to the 2% target remains the central bank's top priority, leaving the door open for additional tightening if price pressures reaccelerate.

Gold's ability to sustain gains hinges on the upcoming US Producer Price Index release, which will provide further clues on the inflation trajectory. A hotter-than-expected PPI reading could reinforce the Fed's hawkish stance and renew dollar strength, potentially pushing gold back toward the $4,030 support level. A break below that opens the path to $3,886, followed by $3,838 and $3,770, according to technical analysis.

DXY Holds Above Key Support

On the daily timeframe, the US Dollar Index remains in a confirmed uptrend, trading above both the 50-day and 200-day simple moving averages. Price is retesting a resistance-turned-support zone near 100.50, and as long as this area holds, the probability of a rebound toward the May high of 101.965 remains elevated, according to chart analysis.

The 4-hour chart shows the index trading above the 200-period SMA while respecting an ascending trendline, creating a confluence of support that increases the likelihood of a bullish continuation.

Gold's Bearish Structure Persists

Gold continues to trade below both the 50-day and 200-day SMAs on the daily chart, confirming that the broader trend remains bearish. Recent price action suggests selling pressure still dominates, with bullish moves appearing corrective rather than trend-reversing.

On the 4-hour timeframe, market structure continues to form lower highs and lower lows. The previous rally into the premium zone near $4,194 created another lower high rather than confirming a trend reversal. As long as price remains below $4,194, the probability of forming a new lower low remains high.

Geopolitical tensions in the Middle East continue to provide a floor for safe-haven demand. Although President Donald Trump withdrew the proposed 20% transit fee for ships passing through the Strait of Hormuz, the US continues military operations against Iran, keeping oil prices elevated. Higher energy prices could reignite inflation pressures, potentially supporting the dollar and limiting gold's upside.

This article is for informational purposes only and does not constitute investment advice.