Gold this morning (May 11) is at $4,694, down $20 from yesterday, which is surprising because the Iran war is not over yet, but gold prices are falling instead of rising.

The reason is that the market is now more concerned about inflation. When Trump rejected Iran’s offer, Brent oil surged 4% to over $109, causing inflation to rise. The Fed has to keep interest rates high. High interest rates are what pressure gold prices because gold does not pay returns. This cycle explains why gold prices are declining today despite the ongoing war news.

The trend for gold prices tomorrow depends on the CPI figures released at 19:30 Thai time. The market expects 3.7% annually. If the number is hotter than that, gold may plunge further. If it’s cooler, prices could rebound.

From technical analysis, gold is in a short-term consolidation phase after rising from $4,521 to $4,794 two weeks ago. It is now above the 20-day moving average at $4,691 but still below the 200-day moving average at $4,711, which is a key resistance level that needs to be broken.

This week also has a major event: the Fed Chair change. Powell’s term ends on May 15. The Senate will vote to confirm Kevin Warsh as the new Fed Chair. Warsh used to be hawkish on inflation but recently supported rate cuts under Trump. If the CPI comes out hot, he will have to choose between fighting inflation or pleasing Trump. This uncertainty has not yet been priced into the market.

For traders, the medium-term outlook for gold remains bullish, but they should watch the CPI release tomorrow and the Senate vote on Warsh, as both events could be game changers.