Author: Mr. Amar – Technical Analyst

Gold prices rallied yesterday and are consolidating in early Asian markets today after another sharp rise in US inflation was reported in early New York trade. XAU/USD is currently trading at $1963, down 0.18% from a high of $1973 to a low of $1960. Core CPI missed estimates, suggesting the Fed may not need to rush as much as the market has been pricing in. Core prices, which exclude food and energy prices, rose just 0.3%, missing 0.5% expectations. the smallest increase since September.

Although US real yields retreated from negative yield territory and the US dollar continued its bullish trend, gold managed to remain bid. But further Fed comments this week and Wednesday’s US producer price inflation data could pose downside risks, particularly if Fed policymakers continue aggressive talks and producer prices are not moderated as expected, although traders note that gold has been exceptionally resilient amid rising yields over the past few weeks.

Gold prices have been trading in ranges since mid-March, possibly building on the 2022 rally, and could now mature for a continuation higher. However, if a strong US dollar prevails, the $1930 level could come under renewed pressure and if it ever falters, the near-term upside prospects will be severely dented. Now that spot gold prices have convincingly broken above the late March highs of the 1960s, gold bulls will once again target the $2000 mark.