Taking a wait and see attitude all week, buyers returned to the gold market on Thursday, which led to an increase in prices during the volatile trading session. The market is recovering well from early session weakness. While inflation is growing stronger than expected, price action suggests that investors think this is temporary and likely to have no effect on Federal Reserve policy for the time being.
At 19:50 GMT, August Comex gold is trading at $ 1,900.50, up $ 5 or + 0.26%. That’s above the intraday low of $ 1,871.80.
In May, the US CPI rose 5% year-on-year, the highest since the summer of 2008, when oil prices were skyrocketing. Excluding food and energy, the core CPI rose 3.8% year on year, the highest since 1992.
A third of the growth was attributed to a sharp 7.3% increase in the price of used cars and trucks. Economists said this could be a sign that price increases may be temporary as they are concentrated in areas affected by the pandemic.
Technical Analysis of Daily Swing Charts
According to the daily fluctuation chart, the main trend is downtrend. A trade up to $ 1,919.20 would reverse the underlying trend to an uptrend. A move through $ 1,855.60 would signal a resumption of the downtrend.
A minor trend is also downtrend. A trade up to $ 1906.90 will change the minor trend to an uptrend. It will also shift momentum for the better.
The main resistance is the long-term recovery zone from $ 1899.20 to $ 1951.30. Gold is currently testing the lower level, or 50%, at $ 1,899.20.
The smaller range is $ 1,854.40 to $ 1,919.20. Its 50% level at $ 1,886.80 is potential support.
The short-term range is $ 1810.70 to $ 1919.20. Its 50% level at $ 1,865.00 is potential support.
The short-term direction of the August Comex gold market is likely to be driven by the trader’s reaction to the major 50% level at $ 1,899.20.
A sustained move above $ 1,899.20 will indicate the presence of buyers. If you pick a smaller top at $ 1906.90, buying is strengthening. This could trigger a spike towards the major top at $ 1,919.20. This is a potential trigger point to accelerate to the long-term Fibonacci level of $ 1951.30.
A sustained move below $ 1,899.20 would signal the presence of sellers. This could lead to testing the 50% low at $ 1,886.80.
Buyers can enter the first test at $ 1886.80, but if it fails, prices could drop to Thursday’s low at $ 1871.80 followed by a 50% level at $ 1865.00 and a major bottom at $ 1855 , $ 60.