Gold Struggles Near $1,875 – A Quick Trade Plan

Despite mounting bets on the Federal Reserve (Fed) taking an extreme hawkish stance this week, gold prices oscillated in a narrow range of $1,868.92-1,879.25 in the early Asian session. Following the US Consumer Price Index (CPI) released Friday, the precious metal displayed a juggernaut upside move. The price of GOLD rose quickly from $1,828.99 to $1,879.25.

The US Bureau of Labor Statistics reported the US CPI at 8.6 percent, significantly higher than the previous print and forecasts of 8.3 percent. In addition, the core CPI, which excludes food and oil prices, increased to 6% from 5.9% expected. However, it is worth noting that the food and oil processes play a much more significant role in exacerbating the inflationary situation. In terms of percentage growth, the core CPI, excluding oil and food, has risen less than the plain vanilla CPI.

Higher-than-expected US inflation and better-than-expected US Nonfarm Payrolls (NFPs) are compelling for the Federal Reserve (Fed) to announce a rate hike on Wednesday.

Gold Technical Outlook

On a four-hour scale, the gold price is about to break out of its sustained consolidation formed in a scope of $1,825.10-1,876.01. The bullish momentum has been strengthened by a stronger responsive buying action noted last week from $1,825.10. The precious metal is bidding up from its 50-period Exponential Moving Average (EMA) of $1,853.15.

In the meantime, the Relative Strength Index (RSI) (14) has entered a bullish range of 60.00-80.00, adding to the upside filters. The gold price rallied strongly upwards to breach $1,850, paving the way for more expected gains on an intraday basis, activating the positive scenario that targets $1,890.00 as the next central station, noting that the continuation of the bullish wave is dependent on price stability above $1,850.00, and significantly above $1,838.10.

Good luck!