Gold forms lower highs and finds support at $2,300, forming a descending triangle pattern on the 4-hour chart.
Is he about to go back to the bottom soon?
Take a look at the inflection points I'm seeing:
Gold (XAU/USD) 1 hour Chart by TradingView
Gold traders appear to be playing it safe ahead of US inflation updates this week, as PPI and CPI numbers could have a strong impact on the Fed's policy outlook.
After all, it appears that FOMC officials are still making up their minds when it comes to choosing between easing sooner rather than later or keeping interest rates higher for longer.
In their May statement, policymakers stressed that they were waiting for more evidence that inflation could return to target before deciding to make any adjustments.
Remember that directional biases and volatility conditions in market prices are usually driven by fundamentals. If you haven't done your financial homework on gold and the US dollar yet, it's time to check the economic calendar and stay up to date with daily fundamental news!
Weaker than expected PPI and CPI updates could lead to a new wave of decline for the dollar, as this could confirm the “lack of progress on inflation” mentioned during the Fed’s decision.
If so, gold may make another attempt to break above the top of the triangle near $2,350 and then set its sights on highs near R2 ($2,430.35) or higher.
On the flip side, stronger-than-expected US inflation data may revive talks about a rollback in Fed policy, which could pull XAU/USD into triangle support.
Don't forget that the gap between the moving averages has narrowed enough to indicate a possible bearish crossover soon.
Whichever trend you choose to trade, make sure you stick to your risk management plan and that you keep a close eye on any major headlines that may impact the gold price movement!
