During Thursday’s trading session, the gold market reached the bottom of the general consolidation region. Given that we are awaiting CPI data on Friday, it seems reasonable that gold would be volatile.
Analysis of Gold Market Technicals
Gold markets have declined somewhat during Thursday’s trading session, as we continue to observe a great deal of erratic behavior as we await the U.S. CPI statistics. The statement on Friday will provide insight into the current state of inflation in the United States and may hint at what the Federal Reserve may do next. Clearly, this has a substantial impact on the gold market and, of course, the bond market.
The market is expected to continue experiencing high levels of volatility for the foreseeable future; however, if we break below the $1825 level, it is probable that the market will drop below the $1800 level. The $1800 level aligns with the uptrend line from the previous several years, so I would anticipate a little of false support there. If we were to break below $1800, it is highly probable that we would see a significant amount of decline.
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If we can break over the 50-day exponential moving average (EMA), then it’s possible that this market will open up the prospect of $1900 and then finally $2000. At this point, it boils down to whether the Federal Reserve appears likely to maintain its extreme hawkishness or whether the rate of inflation begins to moderate. At this moment, it is anyone’s guess where we may go, but it looks that the bond market is pricing in a more hawkish outlook for Thursday.
