The bulls are holding the price of gold above the psychological resistance of $ 1,800, which will continue to support the positive viewpoint for the price of gold as it attains higher gains.
For two consecutive days, gold was the subject of profit-taking that pushed it towards the $ 1,814 support level after a period of bullish steadiness around the $ 1,845 resistance. The US dollar reconvened after higher-than-expected inflation figures, which contributed considerably to the pressure on the price of gold, which alleviated around the $ 1,818 level at the start of trading on Thursday, waiting for something new. In general, data showing a surge in inflation in the United States during April has led to speculation that the Fed will take steps to restrict prices.
In the same performance as gold, silver fell to $ 27.24 an ounce, while copper futures closed around $ 4.736 a pound.
The Labor Department said its U.S. consumer price index rose 0.8% in April after rising 0.6% in March. Economists had expected consumer prices to rise 0.2%. Apart from food and energy prices, consumer commodity prices in the United States also increased 0.9% in April after rising 0.3% in March. Basic prices are expected to rise another 0.3%. The larger-than-expected increase in basic consumer prices reflects the largest surge since April 1982.
With a much higher-than-expected monthly increase, consumer prices in April rose 4.2% from the same month last year, reflecting the largest surge since September 2008.
Since the late 1960s and early 1970s, there has not been prolonged high inflation in the United States, with consumer prices increasing by double or nearly 10% year over year. The opposite has been true for almost a decade. Inflation has been steadily below the Federal Reserve’s annual target of 2%. Under Jerome Powell, the Fed is betting that it can keep interest rates very low even as the economic recovery begins and that it won’t have to raise interest rates quickly to stop the rapid increase in inflation.
Few economists are of the notion that the nation is on the brink of rampant inflation. But business, consumer, and investor concerns about alarming inflation are intensifying.
Gold technical analysis
Meanwhile, from a technical point of view, the price of gold moved at the 10-day EMA in the strong uptrend and could still appeal to buyers to what would be a correction from the previous weekly and daily bullish momentum.
We have already seen the average reversal of 50% to 1,808, today’s low.
A deeper move and a break below the 10-day EMA opens the risk of a test of the next confluence zone at the 61.8% Fibonacci retracement, which hits 1800 and goes in line with the April 22 highs as a support structure.
On the hourly chart, this will denote a breakout at two critical backings and put the Bulls and Bears in a bar fight situation.
The bears will want to avoid that trap and will wait for a downgrade if the price falls below 1815, smoothing the breakout correction.
Also, there is a liquidity gap below the second support structure that bears will want to exploit on a breakout in the structure.
Shorter time frames, such as the 15 or 5-minute charts, provide insight into such scenarios where price action can be fast, looking for smaller price change increments and a bearish structure for an ideal entry point.