Gold looks for fresh signals from US inflation data
Spot gold is holding near 10-month low and within a narrow range, as traders await release of US inflation figures for June for fresh signals.
The yellow metal is in a steep downtrend from 2022 peak at $2070, posted in March, despite soaring inflation, as recent swift rate hikes made the greenback more attractive instead of zero-yield gold, seen as a hedge against inflation.
Bears eye key supports at $1680 zone (Mar-Aug 2021 higher base / Fibo 38.2% of $1046/$2074 ascend), violation of which would generate reversal signal of larger 2015/2020 uptrend, on completion of a double-top pattern, as well as monthly bull-trap above $2000 barrier.
Today’s data could be crucial for gold, with inflation at forecasted 8.8% in June from 8.6% in May or possibly above expectations would fuel hopes for another Fed’s 0.75% hike in July meeting that would further inflate dollar and increase pressure on metal.
On the other side, gold may benefit from signals that inflation has peaked (June figure below forecast) that would probably deflate Fed’s strong hawkish stance and lift metal’s price.
Bearish scenario sees increased risk of attack at key $1680 support zone that would open way for extension towards $1652 (200WMA) and $1595 (30MMA).
Conversely, gold may bounce on inflation surprise, with violation of initial resistance at $1760 (falling 10DMA) to unmask psychological $1800 barrier, reinforced by falling 20DMA.
Res: 1744; 1752; 1760; 1786
Sup: 1725; 1700; 1680; 1652