Gold price remains under pressure ahead of the US CPI numbers set for release on Thursday. Even so, it is still range-bound amid uncertainties over the Fed’s next move.
While gold price remains under pressure, it has failed to make a decisive move ahead of the US inflation data set for release on Thursday. Amid the uncertainty over the Fed’s next move, expectations of strong CPI numbers have boosted the US dollar and Treasury yields.
On Monday, Fed Governor Michelle Bowman indicated that additional interest rate hikes may be necessary to bring inflation levels closer to the Fed’s target. This is contrary to New York Fed President’s opinion that the US economy is entering an environment of lower inflation.
Strong US CPI figures may mean the Fed has more room to keep increasing interest rates. If that happens, it will be a bearish catalyst for gold price; at least in the short term.
Gold price technical analysis
Gold price extended its previous losses on Tuesday to trade at a level last hit about a month ago. The losses recorded on the first two sessions of the current week are a continuation of the prior two weeks in the red. It was trading at 1,925.19 as at the time of writing.
A look at its daily chart shows gold price trading below the 25 and 50-day exponential moving averages. Indeed, the two technical indicators are converging at around 1,950. While the outlook is rather neutral, I have a rather bearish bias. In fact, it is likely that the short-term 25-day MA will cross the 50-day MA to the downside to form the bearish death cross. The bulls will need to break past the resistance zone at 1,950 for an opportunity to reverse the trend.
In the immediate term, I expect the precious metal to continue trading within the range of between 1,950 and 1,914.45. Below the range’s lower border, the bulls will be striving to defend the crucial support at 1,900. On the upside, a rebound may yield a bearish double top pattern at around 1,978.73.