July 14, 2026. Gold is currently trading flat after bouncing off an eight-month low last month. Tonight will determine the next direction, as three waves of data and speeches will come out in a row from the CPI at 8:30 pm until dawn, and each of them has the potential to change the market direction quickly.
The $4,204.63 Level Is the Main Focus
Gold prices are currently trading around $4,201.47. But if you want to focus on just one number tonight, make $4,204.63 your main reference.
Throughout July, gold has not been able to consistently break through this level. As long as there is no daily candle close above it, strong upward momentum has not yet formed.
If this level is successfully broken, the price has the potential to continue rising to $4,282.93. On the other hand, if it fails to break through, not to mention supported by high inflation data and firm statements from Warsh and other Fed officials, gold risks falling to the support of $3,642.94.
Relationship Between Interest Rates & Gold Prices
Before entering tonight's event, it is important to understand a basic principle, which is that gold and interest rates usually move in opposite directions.
Gold does not provide any interest returns like bank deposits or bonds. So when expectations that the Fed will raise interest rates are getting higher, more and more investors choose to keep their money in the form of bonds or deposits that provide returns, compared to gold that does not provide any interest at all.
This is why CME FedWatch is important to monitor. This tool measures market expectations of Fed actions based on actual transactions. If the probability of an interest rate hike through CME FedWatch increases, gold will usually be depressed. On the other hand, if the probability falls, gold has room to rise.
CPI Determines Direction Early Tonight
The main focus of the market at 8:30 tonight will be the CPI figure. If it comes out lower than expected, the pressure on the Fed will ease, the dollar will weaken, and gold will have room to rise.
On the other hand, if the number is higher than expected, many will see this as evidence that inflation is still high, especially with the pending energy supply disruptions in the Middle East. When this happens, the cost of holding gold will be higher, and prices will be depressed.
The Redbook Index at 8:55 pm should also be monitored, because it will give an idea of whether Americans' spending is still high or has started to decline.
Warsh Testimony at 10 pm
Kevin Warsh will make an important appearance at 10 pm. Since leading the Fed, his speaking style has been more cautious than previous Chairman.
If he seems more concerned about economic growth than inflation, the market will see this as a sign that the Fed is comfortable with pausing for the time being. On the other hand, if he insists on controlling inflation, expectations of an interest rate hike before the end of the year will increase.
If the $4,204.63 level still fails to be broken even after this testimony, gold is likely to continue to be depressed.
Four Fed Officials Speak Until Dawn
After midnight, Barr, Goolsbee, Cook, and Bowman will speak one after another until almost 3 a.m. Goolsbee and Cook are usually more cautious in their stance, while Bowman is known as one of the most adamant on the FOMC to control inflation.
The combination of the four positions will determine the direction of gold before the close of the session. For reference, CME FedWatch currently places a 70.1% probability that the Fed will remain on hold at the July 29 meeting.
Key Takeaways
$4,204.63 key, break above could take gold to $4,282.93
Failure to break, plus strong data and hawkish Fed statement, gold risks falling to $3,642.94 support
Gold and interest rates move in opposite directions, high probability of rate hike on CME FedWatch usually weighs on gold prices
CPI at 8:30 PM early direction-setter
Warsh's testimony at 10 PM could change interest rate expectations
Four Fed officials' speeches from midnight to 3 AM determine session close
CME FedWatch: 70.1% chance of Fed remaining on hold on July 29
With such a long sequence of events, market sentiment has the potential to reverse direction more than once throughout the night. Anyone holding XAUUSD positions would do well to stay alert until the Asian session opens tomorrow.
