- Progress on inflation driving gold’s gains
- UK becomes the latest to make significant improvements
- $2,000 a major psychological level
Gold broke higher again on Tuesday after briefly paring gains late last week and early this.
Lower yields and a weaker dollar are continuing to boost its appeal on the back of some more promising inflation data and lower interest rate expectations.
That inflation data has been both widespread, from the US to the eurozone and now the UK, and at both the headline and core levels, which is what’s offering so much hope.
Will lower inflation help gold to recapture $2,000?
The yellow metal broke above $1,960 yesterday before running into some resistance around $1,980.
XAUUSD Daily
Source – OANDA on Trading View
A break above here could see it close in on $2,000 which is the next major barrier to the upside. A break of this may indicate traders have turned bullish on gold after two months of declines as up until now, it may have simply been experiencing a correction of recent declines.
Below, $1,940 still looks key, being a level that’s triggered so much support and resistance over the last four months. A break below could be perceived to be bearish and a sign that the move in July was in fact a correction and nothing more.
At this point, $1,900 could be key, with the 200/233-day simple moving average band below that a potential area of interest.
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Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.
His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.
Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
