Gold Price Forecast – Gold Drops After CPI Numbers Surprise

Gold Markets Technical Analysis

You can see the gold market initially did try to rally early during the trading session on Wednesday but has since fallen. This makes a certain amount of sense as CPI came out hotter than anticipated. So, people were betting that the Fed may not cut rates as much as they thought. It really doesn’t matter.

At this point, the market’s overstretched, so I think a pullback makes quite a bit of sense. Given enough time, there will be buyers returning, but right now I’m willing to step on the sidelines in hope that gold comes back to me at a reasonable price. The $2,200 level underneath begins a significant support band that extends down to the $2,150 level. I would love to buy gold in that area. I don’t know if we dropped that far, but really at this point, I think you’ve got a situation where you’re just looking for value.

So, I’m going to monitor this. I want to see a pullback, and then I want to see a little bit of a bounce, and then I’ll start to pile back into gold. We are really high as far as the relative strength indicator is concerned at the relative strength index, and now have formed a bit of a double top. That double top on the RSI suggests that perhaps a pullback is imminent as well.

A little bit of profit taking makes sense. People have made a ton of money in this market, but despite the fact that the CPI was a little bit hotter than anticipated, it’s not enough to change the overall outlook I believe. I just think that it’s a reality check for a lot of traders. I’m going to step to the sidelines and see where we drop to first.

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