Gold started the week with a slight decline due to its failure to stabilize above the upper line of the bullish channel. The negative outlook for the 9-period simple moving average explains this drop, as the price is trading below it on the 4-hour chart. However, we are awaiting confirmation of a downtrend with a daily candle close below the indicator, along with some negative signals from the Relative Strength Index, after the price reached overbought territory.
Currently, gold is trading within an bullish channel, aiming to break the daily pivot point at $2667. This level is considered significant as it represents the midpoint of the channel, if the price manages to settle below it, it could create bearish pressure on gold, potentially pushing it towards the first support at $2636. It is important to note that breaking this level would have a substantial impact, opening the way for gold to decline towards the key support at $2584.
On the flip side, if gold manages to rise and settle above the upper line of the ascending channel, this could be a positive signal for the price. In this case, the price is expected to rise towards resistance at $2720. It is important to observe that breaking this level and settling above it would provide strong support for the continuation of the bullish trend. With sustained positive momentum, the price may target $2750 on the short term, indicating a strong opportunity for further gains.
On the other hand, investors are awaiting this week the release of crucial economic data that is expected to have a significant impact on the paths of various assets in financial markets. Among this data is the release of the annual Consumer Price Index (CPI), which is considered one of the key indicators of inflation. This index is mainly used by policymakers to assess core inflation in the economy and make decisions regarding monetary policies, such as setting interest rates. Expectations suggest that the CPI data may show an increase to 2.9%, compared to the previous reading of 2.7%. If the data exceeds expectations, the dollar may rise due to increased inflation, leading the Federal Reserve to keep interest rates high for a longer period to absorb inflationary pressures, which could contribute to a decline in gold prices.
Additionally, markets are waiting for the Producer Price Index (PPI) data, a key measure of changes in the prices of goods and services produced and sold by companies. The PPI is expected to show an increase to 3.4%, compared to the previous 3%. If data exceeds expectations, it could support the dollar’s gains, potentially leading to a decline in gold prices.
Thursday is considered a day filled with several important economic data points, including core retail sales, the Philadelphia Index, and unemployment claims. However, attention is likely to be primarily focused on the unemployment data, as forecasts suggest that the number of unemployed individuals may rise by 210,000, representing an increase from the previous reading of 201,000. If the data is worse than expected, it could raise concerns about the health of the labor market, which would increase pressure on the dollar and have a positive effect on gold prices, as investors tend to buy the yellow metal in times of economic uncertainty.