Gold Price Talking Points
The worth of gold bounces again from a recent yearly low ($1707) after exhibiting a kneejerk response to the larger-than-expected uptick within the US Consumer Price Index (CPI), and looming developments within the Relative Strength Index (RSI) could level to a bigger rebound in bullion because the oscillator is on the cusp of pushing above 30.
Gold Price Rebound Following US CPI Raises Potential for RSI Buy Signal
The worth of gold tracks the restoration throughout valuable metals because it pares the decline from the beginning of the week, and bullion could try to retrace the decline from the month-to-month excessive ($1814) because it seems to be reversing course forward of the August 2021 low ($1682).
As a consequence, a near-term correction could materialize forward of the Federal Reserve rate of interest determination on July 27 because the uptick within the US CPI encourages market contributors to hedge towards inflation, and it stays to be seen if Chairman Jerome Powell and Co. will reply to the event as “participants judged that an increase of 50 or 75 basis points would likely be appropriate at the next meeting.”
Source: CME
However, the Federal Open Market Committee (FOMC) could proceed to regulate its strategy in normalizing financial coverage because the CME FedWatch Tool displays a higher than 70% chance for a 100bp price hike later this month, and the FOMC price determination could drag on the value of gold if the central financial institution prepares US households and companies for a restrictive coverage.
Until then, hypothesis surrounding the Fed’s subsequent transfer could affect bullion because the replace to the US CPI generates a kneejerk response, however lack of momentum to check the August 2021 low ($1682) could result in near-term correction within the worth of gold because it snaps the latest sequence of decrease highs and lows.
With that stated, the rebound from the month-to-month low ($1707) could generate a textbook purchase sign within the RSI because the oscillator is on the cusp of pushing above 30, and the valuable steel could try to retrace the decline from the month-to-month excessive ($1814) because the bearish momentum abates.
Gold Price Daily Chart
Source: Trading View
- The worth of gold seems to be reversing course forward of the August 2021 low ($1682) because the rebound from the yearly low ($1707) pushes the Relative Strength Index (RSI) in direction of 30, with the oscillator on the cusp of providing a textbook purchase sign because it recovers from oversold territory.
- Lack of momentum to carry beneath the $1725 (38.2% retracement) area could push the value of gold again in direction of the Fibonacci overlap round $1761 (78.6% growth) to $1771 (23.6% retracement), with a break above the month-to-month excessive ($1814) opening up the $1816 (61.8% growth) space.
- However, the rebound from the yearly low could develop into a correction within the broader development because the 50-Day SMA ($1822) displays a destructive slope, and the transferring common could proceed to cap the value of gold like the value motion seen earlier through the earlier month.
— Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong
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