Going long on gold amid slowdown in US inflation

The fundamental outlook for gold is largely shaped by the current inflation divergence between the United States and Europe. It is no secret that the precious metal is the world’s primary hedge against price pressures. Moreover, any shifts in real interest rates tend to influence bullion. Yesterday’s US macroeconomic data laid solid groundwork for gold’s long-term upside. Let’s take a closer look. The July Consumer Price Index (CPI) aligned with market forecasts, reducing short-term speculative noise and allowing major players to soberly assess the real value of money in the medium term.

Turning back to inflation: yesterday’s US CPI report served as the key catalyst for the metal’s rally. In short, the annual figure slowed to 3.4%, while the core reading eased to 2.5%. This outcome is a critical signal for the gold market, as it gives the Federal Reserve (Fed) room to finally cut interest rates. Such a move is likely to take American Treasuries and the greenback—the two main competitors of non-yielding bullion—out of the spotlight.

When the Fed eases monetary policy, the appeal of US bonds diminishes, and actual returns approach zero, thanks to lower inflation readings. Under these circumstances, the opportunity cost of holding gold declines, pushing institutional capital away from cheaper Treasuries toward the increasingly attractive metal. Bullion thrives in such an environment, climbing higher.

The overall recommendation is to buy gold. Profits should be taken at 1.16400. Stop Loss could be set at 1.14585.

The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.