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Gold Price Bouncing From Dynamic Support, $2,000 Looms Large

Gold prices
Gold prices

The gold price has reached a new all-time high above $2,000 last summer and then corrected several hundred pips to below $1,700. However, it found strong support, and a bullish trend started this April, a trend that drove the price action back above $1,900. Logically, the next step for bulls would be a move above $2,000, possible if we consider the higher inflation data in the United States and the weak dollar.

Speaking of inflation, the most important piece of economic from last week was the PCE for the month of April. Released on Friday, it showed that the core PCE prices rose +0.7%, the highest print since 1992. Also, the headline PCE inflation grew by +1.2%, reaching 3.6% on an annualized basis – the highest since 2008.

Gold has been traditionally viewed as a hedge against inflation. Therefore, the higher prints both on the PCE and the headling CPI for the month of April boded well for gold bulls. In fact, the rise in the price of gold for the month of May is attributed to the inflation data in the United States, much higher than expectations.

Gold Price Technical Analysis

Gold remains bullish while inside the rising channel. Only a break below $1,880 may trigger some weakness, but the bias is for more upside to come. Bulls may want to remain on the long side with a stop at $1,860 and a target set by using a risk-reward ratio of 1:2.

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Gold Price Forecast

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