A troy ounce of gold is getting cheaper and heading towards 2560 USD on Thursday.
For gold prices, the current value is an eight-week low. It is being influenced by the strong US dollar. The market analyses the latest inflation statistics released in the States and draws rather ambitious conclusions.
The inflation statistics actually came out within expectations. The only thing that might have hurt investors' attention was the three-month inflation numbers, which rose on a year-on-year basis. Even so, the CPI data increases the likelihood of an interest rate cut by the Federal Reserve in December. The odds of a rate cut are around 80%, up from less than 60% a couple of days ago.
Since last Friday's sell-off, the gold price has already fallen by 4%. The stock exchange opinion is as follows: since Donald Trump will become the new US President, sooner or later the Fed will be forced to stop the easing cycle. This is due to the protectionist policies that Trump and his administration usually pursue, which can stoke inflation.
A strong U.S. dollar will visibly weigh on the value of gold and force the precious metal to retreat.
XAUUSD Technical Analysis
On the H4 chart of XAUUSD the market has formed a consolidation range around the level of 2608.00 and with a downside exit continues the development of the second half of the third wave of the trend to the level of 2511.65. After working off this level, we will consider the probability of the beginning of the correction wave to the level of 2608.00 (test from below). After the completion of the correction we expect the beginning of a new wave of decline to the level of 2430.00. Technically, this scenario is confirmed by the MACD indicator. Its signal line is under the zero level and is directed strictly downwards.
On the H1 chart of XAU/USD the market broke through the level of 2590.00 downwards and reached the level of 2560.00. We expect the development of a compact consolidation range around this level. In case of an upward exit, a correction link to the level of 2577.00 is not excluded.
In case of a downward exit we will consider the continuation of the wave to the level of 2511.65. The target is local. Technically, this scenario is confirmed by the Stochastic oscillator. Its signal line is under the level of 50 and is directed strictly downwards to the level of 20.
By RoboForex Analytical Department
Disclaimer
Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.