The price of gold bounced from the $1,860 area last Friday on a worse than expected NFP report in the United States. Despite the general weakness in the dollar, the move higher did not break the series of lower highs, and now the market meets horizontal resistance.
Commodities remain well bid on the back of weakness in the dollar and inflation fears. Traditionally, gold has acted as a hedge against inflation, and the recent move higher from below $1,800 started when the inflation data in the United States increased more than the market participants expected.
Not only gold traded with a bid tone but other commodities too. Oil, for instance, trades close to $70 after only last year it settled in the negative territory.
Later in the trading week, the US inflation data for the month of May is due. The market participants expect both core and headline inflation to rise by 0.4%, but the chances are that the data will print higher.
Gold Price Technical Analysis
From a technical perspective, the gold price is at horizontal resistance. Bulls may want to wait for a close above resistance before going long with a stop at the recent low and targeting a risk-reward ratio of 1:2. On the flip side, bears may want to sell on a new lower low, having a stop at the previous lower high and setting the target by using a similar rr ratio.
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Gold Price Forecast
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