- A new lower low triggers more dips.
- US inflation data should shake up the price.
- False failures can bring a new rally.
The price of gold is trading in the green at $2,026 at the time of writing. However, downside pressure remains high in the short term despite Friday’s recovery.
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Surprisingly or not, KSAU/USD jumped higher in the last trading session even though the US reported positive data. However, the yellow metal rallied only because the US dollar was overpriced after a strong rally. Now the dollar has turned higher again, so gold has erased the latest gains.
The change in non-farm employment, average hourly earnings, jobless claims and factory orders were better than expected.
The price of gold appears to be under pressure in the short term following the release of Swiss inflation data today. The consumer price index rose 0.0% versus a 0.1% decline estimated after a 0.2% drop in the previous reporting period, while retail sales rose 0.7%, beating the forecast of 0.0 %.
The most important event of the week is the release of US inflation data. CPI m/m may record a growth of 0.2% compared to a growth of 0.1% in the previous reporting period, while the CPI on an annual basis is expected to be 3.2%. Higher inflation in December compared to November could boost the dollar.
Gold Price Technical Analysis: Strong Downside Pressure
Technically, the price of gold fell again after registering a false breakout through 23.6% ($2,061). It has now fallen below the 50% level (2,030) and is challenging static support at $2,027.
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The metal is traded in the demand zone. So just making a new lower low could trigger more declines. False failures and returns above 61.8% can lead to another return.
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