Gold Bugs Eye Inflation Data

While investors waited for inflation data in the U.S. that might affect when the Fed begins reducing stimulus, gold was in demand.

Traders are nervous about that question because it will determine the fate of the Federal Reserve’s bond-buying program. Consumer Price Index statistics will be released by the US on Tuesday and ranges will remain narrow as tensions continue to mount.

For a fourth month, the consumer price index is anticipated to show 5% or higher inflation on an annual basis. As a result of persistent supply chain disruptions, producer price indexes for final demand rose to a new series high last week.

Gold traders are weighing the risks related to the delta virus variant and rising inflation as the price of gold dips below $1,800 an ounce. Expectations for when the Fed might start tapering bond purchases might shift closer to November as consumer prices come in hotter-than-expected.

It has support across all of the Fibonacci levels of 38.2% for one day, 23.6% for one-week, Simple Moving Average 100 on the hourly chart, among others, at $1,794 an ounce.

The one-day Bollinger band and the Fibonacci 38.2% one-week meet at $1,801 an ounce, providing substantial resistance.

On a longer timescale, the long-term target is $1,815, an ounce which is the intersection of the Pivot R3 one-day and the 100-day SMA.

A downside target of $1,778, on a juncture that includes the Fibonacci 61.8% one-day and the S2 of the Price Pivot, is a potential target for bears.

Inflation reports should provide some insight on whether inflation is temporary, which may explain how gold prices have remained steady.

As a result of the delta variant shock to supply chains, bullion may fall around the time of the CPI data, although it will likely be on the upside surprise side of the Consumer Price Index.