#Gold Technical Analysis# 24K99 Information In early European trading on Wednesday, spot gold accelerated its short-term rise and just broke through the $2470/oz mark. Dhwani Mehta, a senior analyst at FXStreet, has written a latest article on the daily trading analysis of gold price.
Mehta pointed out that the gold price defended the psychological $2450/oz mark, and on the day of the US CPI inflation data, the gold price is expected to reach the one-week high of $2477/oz.
Mehta said that after the PPI inflation data released one day earlier exceeded expectations and cooled down, gold buyers still expected the US CPI report to be weak. Gold needs a weak US CPI inflation report to reach the $2500/oz level.
Data released on Tuesday showed that the US Producer Price Index (PPI) rose by 0.1% month-to-month in July, compared with market expectations of a 0.2% increase. The US PPI rose by 2.2% year-on-year in July, lower than the expected 2.3% increase.
In addition, the US PPI remained unchanged month-to-month in July, the mildest reading in four months, with market expectations for a 0.2% increase.
US consumer price index (CPI) data for July will be released at 20:30 on Wednesday Beijing time, which is expected to provide important clues for the Fed's rate cut prospects.
According to the 'Fed Watch Tool' of the CME Group, the market currently expects a 54% chance of a 50 basis point rate cut by the Fed in September.
Mehta wrote that the US CPI for July is expected to rise by 2.9% year-on-year, while the data for June was 3%. The expected year-on-year increase in core CPI in July is expected to drop from 3.3% in June to 3.2%. It is expected that the month-on-month increase in CPI in July is 0.2%, and the core CPI may also rise by 0.2%. If the overall CPI year-on-year data is below expectations, it may confirm the Fed's bet on a major rate cut, providing additional support for the downside trend of the US dollar. The gold price may also hit a new historical high.
Mehta added that gold prices will continue to be supported by geopolitical tensions in the Middle East, as market prepares for Iran's imminent attack on Israel. In addition, speeches by Fed policy makers will also help influence the trend of gold prices.
A report from Deutsche Bank pointed out that Wednesday's US CPI data may once again boost gold prices, and "the record high price of gold is a matter of time."
The latest gold trading analysis
Mehta wrote that from the daily chart, it can be seen that the gold price is challenging the upper edge of the symmetrical triangle (currently $2471/oz). Gold buyers expect the US CPI data to ensure that the daily closing price is higher than this level, which may trigger a new round of upward trend in gold prices and rise to the key level of $2500/oz.
However, gold prices first need to break through the historical high point of $2484/oz.
The key leading indicator, RSI, on the 14th has fallen slightly, but still above 50, indicating that there will continue to be demand for gold prices.
(Spot gold daily chart source: FXStreet)
On the other hand, Mehta added that an unexpected increase in US CPI data could revive selling interest in gold, pushing gold prices down to the support level of the 21-day simple moving average (SMA) at $2420/oz. Before that, the high point of August 9th at $2437/oz may provide some support for gold buyers.
If selling momentum increases, with gold prices falling below the 21-day moving average, the next support level is expected to be at $2380/oz, the intersection of the lower edge of the triangle and the 50-day moving average.
At 16:00 Beijing time, spot gold was reported at $2470.96/oz.