I just noticed something interesting in the gold market over the past period. The price of XAUUSD on Thursday, May 11th was at $4,694. But what's strange is that gold didn't rise when there was news about the Iran war. On the contrary, it fell instead. Why is that? Because the market is worried about inflation. When Trump rejected Iran's offer, Brent oil surged over 4% immediately. Expensive oil prolongs inflation. High inflation forces the Fed to keep interest rates high for a long time, and high interest rates are what push gold down.

Most importantly, the most released number of the week—the US CPI—was expected to be 3.7% annually. If it comes out like that, it's considered very hot. The Core CPI, excluding energy, was expected at 2.7%. If this rises too, it means inflation is spreading beyond oil. Where gold will go depends mainly on this figure.

Another thing not to miss is that the Senate will vote to appoint Kevin Warsh as the new Fed Chair replacing Powell, whose term ends on May 15th. Warsh used to be a hawk on inflation, but recently he supported lowering interest rates following Trump. If the CPI comes out hot, he will have to choose whether to fight inflation or follow Trump's wishes. This uncertainty has not yet been priced into the market. Traders watching this Thursday are likely to see significant volatility.