Author: Amar – Technical Analyst

While the relationship of inflation and gold prices appears more significant over the long term, US CPI release later today remains an important risk event for gold. Inflation has been shown to be more persistent than originally anticipated my most major central banks, which increases golds attractiveness. Investors now await the latest U.S. inflation data, which could offer further clues about the Federal Reserve’s timeline for monetary policy tightening.

Among the key catalysts, the latest comments from the White House and the US Federal Reserve (Fed) official take the front seat. The White House conveyed expectations of a higher inflation figure while also saying, that it is irrelevant month on month number will continue trending lower the rest of the year. Following that, according to White House Economic Adviser Brian Deese said that he sees reason to think that factors boosting inflation will moderate over time. Meanwhile, geopolitical tensions in Eastern Europe continue as Russian increased military capabilities along its border with Ukraine and Belarus, the U.S. Pentagon warned. Although Ukraine believes that the standoff between Western powers and Russia can be resolved via diplomacy, there are already grounds to impose sanctions on Russia.

Looking at the daily chart of XAU/USD, the yellow metal has surged higher since the 28 Jan low around 1780. The bullish move was rather uncertain as two failed attempts to trade lower resulted in the formation of two successive candles exhibiting long lower wicks. The 4-hour chart appears to show waning bullish momentum as price action consolidates ahead of the 1835 level. Bullish continuation may be assessed should prices hold above 1823 but a failure to hold above opens the door towards the long-term range.