The price of gold has bounced strongly after US CPI figures brought buyers back.
XAUUSD – Daily Chart
The price of XAUUSD has found a strong bounce at the support level of $4,878. That sets up another push at the $5,093 resistance level.
US CPI consumer inflation numbers came in slightly lower than expected, however, traders did not see as being a driver of any coming rate cut. That could be clarified by overnight minutes from the Federal Reserve.
The annual inflation rate in the US slowed to 2.4% in January, which was its lowest level since May, down from 2.7% in each of the previous two months and below forecasts of 2.5%.
Gold and silver had been cooling despite the strongest-ever monthly inflows into ETFs. Gold ETFs drew $19bn, marking the strongest month on record.
Gold’s strong rally on Wednesday is still part of a steep uptrend, and despite a sharp dip in January, global appetite and geopolitical trends still point to support for gold.
Global flashpoints remain a threat to metal prices, and Iran shut part of the Strait of Hormuz for military drills. It is the first time this has been done since the 1980s and raises fears of further conflict in the Middle East.
Gold could see a test of resistance this week, and new highs cannot be ruled out in the coming weeks if buyers feel the low is in place.
