Gold - Boosted By US Inflation Data But Recovery Still Early

Republished By Plato

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Recent range highs broken after CPI release
Lower inflation could increase gold’s appeal
One more rate hike expected from the Fed

The US inflation data gave gold just the boost it needed to break back above $1,940 after failing to pierce that level in recent days.

The yellow metal has been range-bound in recent weeks between $1,900 and $1,940 and today’s report did what the jobs data failed to do; it provided the catalyst for a breakout.

Gold Daily

Source – OANDA on Trading View

There remains plenty of resistance ahead for gold and today’s move doesn’t necessarily suggest the correction we’ve seen since May is over but it’s a massive step in the right direction. If the inflation data continues to improve then that could be bullish for gold.

The next tests for gold are $1,940, $1,960, and $2,000, which roughly represent the 38.2%, 50%, and 61.8% Fibonacci retracement levels from the May high to the June lows.

The inflation data may have come too late to change the outcome of the July Fed meeting, especially in light of the June jobs report, but it may alter the central bank’s language if it does hike by another 25 basis points. It’s going to be a big summer of data.

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Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.