Thu. Jan 27th, 2022

  • Gold gains as US CPI data are released.
  • Overall, the US dollar lost traction as inflation declined slightly in July.
  • Reducing the volume of the Fed and the safe haven state of gold are key points for investors.

Gold prices continued to rise on Wednesday after fluctuating headlong the day before. It also recovered from a close close to the weekend earlier in the week. There is concern about the potential economic impact of the rapidly spreading Coronavirus delta variant, which has helped the precious metal become a safe haven to some extent. In response to mixed U.S. consumer inflation, XAU rose to a two-day high near $ 1,750 at the start of the US session.

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As a result, the general CPI for July fell to 0.5%, from 0.9% in the previous month. The annual rate remained at 5.4% during the month under review, while the consensus forecast indicated a slight decline to 5.3%.

In this context, the basic consumer price index, excluding food and energy prices, increased by 0.3% MoM. In addition, the dollar-denominated exchange rate in US dollars was seen to increase further due to the taking of profits in US dollars.

However, investors are convinced that the Fed will soon begin to backtrack on incentives taken during the pandemic era. In addition, US Treasury yields continued to rise, exacerbating the problem.

Consequently, these gains could deter traders from making aggressive bullish bets on the ruthless metal, given modest gains in US stock futures. Instead, we recommend that you wait for some strong tracking purchases before setting our gold appreciation expectations.

The current upward trend in gold has been dampened by expectations that the Fed’s massive stimulus will soon expire.

Thus, investors have approached the probable time of a monetary tightening. In addition, Fed officials are leading the market toward a rapid end to the massive stimulus of the post-pandemic era and rising interest rates from 2022 onwards.

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Gold Outlook Technical Perspectives: 20-period SMA to limit gains

4-hour gold price chart
4-hour gold price chart

The recent rise remains largely limited by the 20-period SMA on the 4-hour chart. The metal has already completed the average daily range of 91%. Gold is likely to consolidate gains before continuing to rise. If gold dominates the 20-period SMA, the price could rise to $ 1780, followed by $ 1800.

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