Gold Technical Analysis – All eyes on the US CPI report

Fundamental
Overview

Yesterday, we got
a dovish reaction in the markets following the US PPI release where the data came in line with expectations. The reaction
showed that even little signs of better inflation figures can trigger more bids
for gold as Treasury yields and the US Dollar weaken as a result.

This will be
important to remember in light of today’s US CPI report where in line or soft
figures will likely lead to even higher prices for gold in the next days.
Conversely, hot readings might have the opposite effect with gold selling off
and possibly falling to new lows.

Gold Technical
Analysis – Daily Timeframe

On the daily
chart, we can see that from a risk management perspective, the buyers will have
a much better risk to reward around the 2150 level where we can find the confluence
of the trendline
and the 61.8% Fibonacci
retracement level. Such a big drop though could be possible only if we keep
getting high inflation data. For now, the buyers remain in control and the
recent break above the 2352 level opened the door for a new all-time high.

Gold Technical
Analysis – 1 hour Timeframe

On the 1 hour
chart, we can see that the price recently bounced around the 2330 resistance-turned-support
where we had the confluence of the trendline and the 61.8% Fibonacci retracement
level and started to rally as the US PPI report came in line with expectations.
The price is now near the previous high and the upper bound of the average
daily range, so further gains might be limited and from a risk management
perspective, it might be better to wait for a pullback into the trendline.

Upcoming
Catalysts

Today all eyes will be on the US CPI report although we
will also get the US Retail Sales data at the same time. Tomorrow, get the
latest US Jobless Claims figures where it will be interesting to see whether
the last week’s numbers were the start of a trend or just a fluke.

See the video below

This article was written by Giuseppe Dellamotta at www.forexlive.com.