Gold Price: Bullish Flag Signals Further Gains Ahead of US Inflation Data

Gold price has pulled back to 1,835.68 after hitting a three-month high of 1,842.89 last week. Rebounding of the 10-year US treasury yields explains the easing of the metal’s spot price. On Monday, the benchmark bond yields were at 1.57 after dropping to an intraday low of 1.48 on Friday. However, on a broader picture, gold price has found support in the yields’ six-week downtrend from 1.77.

Investors are now eyeing US inflation data for further cues. On Wednesday, the country’s Bureau of Labor Statistics is scheduled to release CPI numbers. Analysts expect the core CPI data to remain unchanged from last month’s number at 0.3%. Gold price will also be reacting to US PPI data on Thursday and retail sales on Friday.  

Gold Technical Outlook

Gold price remains on an uptrend despite its current pullback. On a 4-hour chart, it is above the 25 and 50-day exponential moving averages. Besides, while it isn’t well formed, the bullish flag is a sign that the prices may soar higher in the ensuing sessions. The rallying comes after a breakout from range-bound trading that has existed since mid-April.

I expect gold price to consolidate along 1,840 in the short-term as 1,800 remains a crucial level in the tug of war between bulls and bears in the market. It may drop further to find support at 1,820; resulting in its second sequence of range-bound trading. However, a move below 1,800 will invalidate this thesis. If that happens, the bears will be targeting the prior support level of 1,755.

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