Tuesday’s new monthly high for the gold price (XAU/USD) of approximately $1,800.00 was followed by a decline in volatility. The precious metal experienced a solid upward movement on Tuesday, and then went sideways in advance of the US Consumer Price Index (CPI). Compared to the previous publication, the inflation rate is expected to decline by 40 basis points (bps) to 8.7%, according to consensus predictions. However, an unexpected movement by the price increase index is definitely anticipated.
The investing world is cognizant of the fact that surging oil prices continue to be the primary driver of rising pricing pressures. Now, fixed supply concerns and a pessimistic view for oil demand have led to a greater decline in oil prices. Furthermore, the inflation rate will reflect its multiplier effect.
In addition, last week’s positive US Nonfarm Payrolls (NFP) report suggests that the inflation rate could surprise on the high side. The United States economy added 528k new employment in July, compared to 372k in June. Well, Federal Reserve (Fed) officials will continue to have a difficult job until the dust settles for an extended period.
After a robust rebound from the lower portion of the Rising Channel near $1,765.00, gold prices are rising strongly. The upper section of the aforementioned chart pattern begins at the high of $1,739.37 on July 22, while the lower portion begins at the low of $1,711.55 on July 27.
The 20-period and 50-period Exponential Moving Averages (EMAs) at $1,785.15 and $1,772.00, respectively, are ascending, which reinforces the bullish filters.
In addition, the Relative Strength Index (14) has moved into the bullish zone of 60.00-80.00, indicating further gain.