On Wednesday, gold jumped by over 1%, its highest rise in 2 weeks. The increase came after the publication of inflation data in the United States.
The results came mixed. On the one hand, annual inflation stood at 5.4%, unchanged from the previous month's 13-year high. On the other hand, the July report showed a slowdown in monthly consumer prices growth.
Based on these results, inflation in the US has reached its highest level and is likely to slow down from now on. At the same time, this is going to be a prolonged process, raising investors' hopes that the US Fed will not start tapering soon.
The greenback edged down amid hopes that the US regulator will pursue its current monetary policy in the short term. The US dollar index tumbled by 0.2% on Wednesday, thus boosting gold.
On Thursday, the greenback recovered slightly against the basket of major currencies as some Fed officials spoke out in favor of an earlier start of tapering.
As a result, gold incurred losses, falling by 0.1%, or $1.50. The precious metal closed at $1,751.80.
Analysts note that the greenback still remains the key factor that affects the price of gold. Its dynamic will determine the direction of the precious metal in short and intermediate terms.
On Friday, the US dollar reversed again. At the moment of writing, USDX lost 0.07%. The greenback nosedived against the euro, boosting gold.
Early today, gold rose by 0.33%, or $5.75. The asset was trading at $1,757.55, which was lower than the closing level of last Friday. In other words, the precious metal may incur losses at the end of this week. As a reminder, gold plunged by more than 2% in the previous week.
Gold is currently trading in a very narrow range, giving no reason to believe that the quote may grow above this week's high. At the start of the week, the asset traded at $1,765 but fell by more than 2% later that same day.