Gold struggles around $4,100 as markets await CPI and Warsh's Capitol Hill debut

While the precious metal appears to be carving out a bottom following last month’s sharp losses, analysts warn investors that gold’s critical support could be tested next week as the Federal Reserve’s tightening bias faces a key test from important inflation data. The gold market continues to struggle to sustain bullish momentum, unable to hold convincingly above $4,100 as it prepares to end the week with another loss. Gold prices struggled this past week as fighting in the Middle East once again intensified, extending the global energy crisis, supporting higher oil prices, and fueling inflation fears. Spot gold last traded at $4,097.86 an ounce, down nearly 2% from last week. Analysts explained that this environment is difficult for gold because rising inflation pressures are forcing the Federal Reserve to maintain a hawkish monetary policy stance, and the potential for higher interest rates is increasing the opportunity cost of holding a non-yielding asset. According to some analysts, U.S. monetary policy will be the biggest risk for the gold market as investors try to navigate the shifting narrative under new Federal Reserve Chair Kevin Warsh, who is pushing the central bank to limit and eventually eliminate forward-guidance policies. Next week will feature Warsh’s first testimony before Congress as part of the Federal Reserve’s twice-yearly Semiannual Monetary Policy Report. Since becoming Federal Reserve Chair, Warsh has made it clear that his first priority is price stability, prompting markets to price in at least one rate hike this year, potentially as early as September. However, analysts also note that his tone on inflation could begin to shift as oil prices remain below their May highs above $100 a barrel, easing inflation pressures. Ahead of Warsh’s testimony, markets will be paying close attention to June’s Consumer Price Index, which could provide fresh momentum for gold .