Gold Price Analysis – how steady is the support at $1,800?
Gold price has remained buoyed above the crucial support level of $1,800 after surging above it in the previous session. Tuesday’s rallying of over 1.5% is a reaction to the lower-than-expected US CPI numbers.
US inflation numbers
According to the US Bureau of Labor Statistics, consumer prices rose by 5.3% in August on a year-on-year basis compared to the previous 5.4%. Notably, the released figure matches with analysts’ expectations. On a month-on-month basis, the reading of 0.3% was a decline from July’s 0.5% and the expected 0.4%. With the exclusion of the volatile food and energy components, core CPI came in at 4.0% compared to the forecasted 4.2% and the previous 4.3%.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
The US inflation data are in line with the Fed’s narrative that the inflationary pressures are transitory. For instance, use car prices were down by 1.5% while air ticket prices declined by 9.1% MoM. Other than energy, various items have had their prices stabilize.
While a one-month decline in consumer prices is not sufficient to set a trend, it will likely ease the taper talks. Subsequently, eased pressures on the need for the Fed to tighten its policy right away will be a bullish catalyst for gold price.
As the central bank has maintained in its recent meetings, tapering of asset purchases will not be a precursor for hiking interest rates. Notably, a low-interest rate environment tends to boost precious metals while weighing on the US dollar.
Gold price prediction
Gold price is back up above the resistance-turn-support level of 1,800. On Tuesday, the precious metal surged from an intraday low of 1,780.60. The subsequent rebound represented a 1.58%. It hit a high of 1,808.65 before pulling back to its current 1,803.58.
On a two-hour chart, gold price is trading above the 25 and 50-day exponential moving averages. An evaluation of both the fundamentals and technical point to further short-term gains for the precious metal.
In the near term, it will likely hover around the crucial support level of 1,800. The subsequent formation of a horizontal channel will probably have the upper and lower borders at the resistance level of 1,808.96 an along the 25-day EMA at 1,797.03. However, this thesis will be invalidated by a move below the channel’s lower borer.
67% of retail CFD accounts lose money