FX.co ★ Gold bullish on higher US inflation

The price of gold is rallying at the time of writing. It was trading at 1,856 at the time of writing far above 1,832 today's low. After its massive drop, a temporary rebound was somehow expected. Still, a larger growth needs strong confirmation, we'll have to wait for fresh long opportunities.

XAU/USD crashed after the US inflation data, but now it has rebounded and erased minor losses. The US CPI rose by 0.3% in April versus 0.2% in March, while the Core CPI surged by 0.6% versus only 0.4% expected. So, the US reported higher inflation again. As you already know, Gold is used as a hedge against inflation, that's why the yellow metal is trading in the green.

XAU/USD Upside Breakout!

XAU/USD found support on the 1,831 key level and now it is challenging the descending pitchfork's upper median line (uml) and the 1,853 static resistance. False breakouts above these obstacles may signal a new sell-off.

On the other hand, a valid breakout above these levels may signal further growth in the short term. The S1 (1,852) stands as a resistance as well. Actually, we have a confluence area at the intersection between the resistance levels.

XAU/USD Outlook!

Gold challenges the confluence area formed at the intersection between the upper median line (uml), 1,853, and the S1. A valid breakout through it and above 1,858 former high could confirm an upside continuation and could bring new buying opportunities.