The resilience of the Gold price (XAU/USD) in the face of a negative US dollar is a notable development, reflecting increased demand for the precious metal amid concerns about inflation and monetary policy. The lower CPI and PPI inflation, along with the increased likelihood of Fed monetary policy easing, have contributed to this week’s uptrend.

Yesterday’s reaction to the softer US PPI data suggested a nuanced relationship between inflation indicators and GOLD prices. The fall and then the quick hawkish reversal, despite meeting expectations, underscores the sensitivity of markets to US inflation right now. As investors gauge the implications for monetary policy and asset valuations, Gold emerges as a key beneficiary amid declining Treasury yields and a weaker US dollar.

Gold Chart H4 – The 20 SMA Acting As Support

Today we saw an even more exaggerated response to the US CPI report which was released earlier., market participants are bracing for potential volatility. It was a soft reading which further buoyed Gold prices as investors seek safe-haven assets amidst uncertainty., sending XAU/USD toward the $2,400 level once again.

The bounce off the 2,330 support level which used to be resistance previously during the consolidation in April, combined with the 20 SMA (green) on the H4 chart, suggests a strong bullish sentiment in the market. The rally following the US CPI report further reinforces this bullish sentiment, indicating that buyers are in control of the market.

However, as the price approaches the previous high and the $2,400 level, caution is warranted, as further gains may be limited in the short term. From a risk management standpoint, waiting for a retreat into the 20 SMA before considering further entry points could be a prudent strategy.

Gold Live Chart