The outlook for gold remains positive as the price continues to hold above the $1,920 support zone and shows signs of approaching the $1,950 level.
This week, the bullion price has traded within a narrow range of 1.5%, fluctuating between $1,918 and $1,945, indicating a consolidation phase. From a technical perspective, there have been no significant changes in the past 48 hours, but a clear breakthrough above the resistance zone of $1,945-1,950 could alter the scenario.
Investors are eagerly awaiting the release of US inflation data, scheduled for today at 1:30 PM London time. The average of Analysts’ forecasts, gathered by Reuters and Bloomberg, suggest a projected monthly increase of 0.3% in the core Consumer Price Index (CPI) for June, compared to a 0.4% increase seen in May. Year-on-year data is expected to be released at 5.0%, down from the 5.3% recorded in May, indicating a continued decline in inflation. Any significant deviation from these forecasts could act as a catalyst for market movement.
With the next Federal Open Market Committee (FOMC) meeting just two weeks away, market participants anticipate a final rate hike by the Federal Reserve, raising rates from 5.25% to 5.50%. A CPI increase in line with expectations, or slightly below, could be viewed as a positive signal for both stock markets and gold.
This would alleviate some pressure on the Federal Reserve and increase the likelihood of a more dovish monetary policy in the near future, potentially leading to a decline in interest rates within the next 6 to 8 months. These expectations support the gold price to remain above the $1,900 per ounce level.
Carlo is an external market analyst for Kinesis Money. With a credential background in Economic Finance and International Exchange (MA), Carlo’s critical analysis of gold and silver markets’ performance is frequently quoted by leading publications such as Forbes, Reuters, CNBC, and Nasdaq. This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.