Gold and Silver Prices: Gold and silver prices saw gains in early trading on August 12, driven by increased demand for precious metals amidst geopolitical tensions and uncertainty ahead of US inflation data. On COMEX, gold futures rose 0.35% to $4,456.70 per ounce, while silver prices climbed 0.49% to $65.25 per ounce. Gold touched a high of $4,457 per ounce during the session, while silver reached $65.37 per ounce.

This rise was a market reaction to new geopolitical developments involving Iran, the US, and Yemen's Houthi rebels, as well as missile launches by North Korea. These events sustained demand for safe-haven assets and heightened concerns regarding energy supplies through the Strait of Hormuz.

Oil prices also remained elevated. US crude rose 0.89% to $83.94 per barrel, while Brent crude increased 0.78% to $89.60 per barrel. Both benchmarks had closed with gains of over $1 on Tuesday and continued their recent upward trend.

Investors are also awaiting the US Consumer Price Index (CPI) data scheduled for release on Wednesday (August 12). This report could influence expectations regarding the Federal Reserve's interest rate trajectory.

According to a Reuters survey, US consumer prices are expected to rise by 0.1% in July, following a 0.4% decline in June. The annual inflation rate is projected to ease from 3.5% to 3.4%.

These inflation figures come amidst shifting expectations regarding US monetary policy. An inflation rate lower than expected could bolster hopes for easier financial conditions, whereas a higher inflation rate might heighten concerns about tighter policy.

Gold typically benefits from expectations of lower interest rates, as this reduces the opportunity cost of holding a non-yielding asset.

**Support from Geopolitical Risks**

Precious metals have also found support from renewed geopolitical uncertainty. A standoff persists between the US and Iran regarding the Strait of Hormuz, while separate shipping-related attacks involving the US and Yemen's Iran-backed Houthis have been reported. These recent developments have driven up oil prices and prompted investors to remain cautious. Gold prices have seen a massive surge in recent days.

According to the All India Bullion Association, gold prices in the domestic market rose for the sixth consecutive day on Tuesday (August 11). Along with gold, silver prices also witnessed a sharp spike; on Tuesday, the price of silver in the domestic market jumped by ₹2,000 to reach ₹2.42 lakh per kilogram.

Despite the positive market sentiment, gold's recent rally appears technically overextended.

According to Bespoke Investment Group, gold futures have gained approximately 8% in August. Last week, gold recorded a weekly gain of 7.1%, the highest since January.

Bespoke noted that gold has recently risen above its 50-day moving average and entered 'overbought' territory for the first time since March 10. On Friday (August 7), the metal closed one full standard deviation above its 50-day moving average, ending a 103-trading-day streak without such a reading. Bespoke's historical data shows that following such a prolonged period without an 'overbought' reading, gold has experienced a slight average decline over the subsequent week, month, and three-month periods. This does not necessarily mean that the price of gold will fall, but it points to the likelihood of increased volatility following the massive rally seen in August.