Gold keeps bullish near-term bias, eyes US inflation report for fresh signals
Spot gold remains at the front foot on Monday and extends recovery as dollar pulls off twenty-year high, pressured by renewed risk appetite.
Bounce from $1690 zone, where a temporary base is forming, extended on Monday after an initial signal of a bear trap pattern forming on weekly chart, following double rejection under $1700 support.
Fresh advance dented pivotal barriers at $1732/34 (falling 20DMA / Fibo 38.2% of $1807/$1688), with firm break here needed to strengthen renewed bulls and open way for further gains.
Daily studies improved but still lack momentum, suggesting that the action is waiting for stronger direction signals.
All eyes are on Tuesday’s release of US inflation report for August, with expectations that inflation would ease further to 8.1% in August, after dropping to 8.5% in July, from its multi-decade peak at 9.1%, hit in June.
Signals of further slowing in price pressures would ease the tensions and affect the Fed’s rate hike trajectory, as the US central bank so far kept aggressive stance and many bet for another 75 basis points hike in the next week’s policy meeting.
However, the Fed may soften its view if inflation falls further as this would generate stronger signal that inflation has peaked and started moving downwards.
Such scenario would be supportive for the yellow metal and further lift the price, with extension above $1732/34 pivots to expose next targets at $1748 (daily Kijun-sen / 50% retracement) and $1750 (daily cloud base).
Conversely, disappointing US inflation figures would add to Fed’s hawkish stance and deflate metal’s price for renewed attack at psychological $1700 support.
Res: 1734; 1745; 1750; 1762
Sup: 1716; 1712; 1700; 1694