Gold is in a rallying phase, reaching the 1716 mark and keeping many investors and analysts focused on it. Since the open on Tuesday, gold is up nearly 2.6%. What's behind that, what should we expect to happen next?
(Graph 1: in a wait-and-see format, price breaks strong resistance. Rally to 1716)
The key takeaways so far:
A soft CPI will raise hopes that the Federal Reserve will soften its policy;
Analysts expect a slowdown in the U.S. consumer price index;
In Guangzhou, China, the number of COVID cases exceeded 2,000 for the second day.
(Graph 2: Gold in consolidation phase. The whole market is waiting.)
CPI is the most important indicator at the moment. Lower data would raise hopes that the Fed would slow the trend of monetary tightening, which could put pressure on the dollar and lift gold. According to a Reuters poll, economists expect the monthly and annual core consumer price index to slow to 0.5% and 6.5%, respectively
Prices appear to be consolidating ahead of the CPI release. If the U.S. Consumer Price Index is stronger than expected, prices could fall below $1.690, and if not, gold could break through the $1.725 level
(Chart 3: Technical indicators on the daily chart).
Traders also closely followed COVID-related developments in China, a major bullion consumer, where the city of Guangzhou is struggling with a surge.
Gold is seen as a hedge against inflation, which rate hikes are designed to combat, making the metal less attractive. Higher interest rates also make other assets more attractive than interest-free bullion.
( Figure 4: Formation of a decisive pattern in a local situation)
From the point of view of the technical analysis we see the formation of a local support level and the attempts of the price to break this zone, as the limit resistance has not broken yet
I expect the exit of the price down, consolidation in the short zone and decline to the 1688 zone, before further possible growth.
From the 1688 zone, a pullback to 1700, 1710 is expected. 1720
Absolutely same scenario , until the market will keep a bullish momentum, I will only be looking for that
FOREXN1
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Agree nice idea !
GOLDPIPSMAKER
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Great idea. Thanks for sharing!
mudassirmanzoor28
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short
kiranblakkundi
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Excellent Prediction by You, hats of your analysis
Alchemistssoul
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hey Linda, I joined your VIP telegram group for XAU since yesterday. Is there any way to contact you for questions? I think we hit 3 times the SL just today. wanted to be sure
Mihai_Iacob
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1725-1730 is resistance for Gold, from there it can correct. However, considering the 1k pips reversal from the bottom, is safer to buy dips. As you show in your chart, 1690 zone is a good support for buying