The US CPI data beat forecasts showing the inflation rate is continuing to rise. This caused the price of Gold to trade lower. Will this continue and what are the key levels to look out for?
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The price of Gold traded lower from the recent US CPI data which saw the USD strengthen once again. In recent history the price of Gold has fallen due to the potential for the Federal Reserve to hike rates more aggressively to fight the climbing inflation rate. If however the Federal Reserve is going to hike rates for longer this could see the long term trend for Gold be lower.
Going on to the chart we can see that the price has formed a downward trend on the weekly time frame after trading out of the monthly range. If the price is going to continue this downward trend we could assume more lower lows and lower highs will form and the price is now in a bearish impulsive phase.
The price has formed a consolidation on the 4hr time frame between the $1680.00 and $1661.00 level. This has now been broken to the downside with successive closes below. This is a sign that selling pressure will resume. If the price was to retest this consolidation zone and reject, we could assume that sellers will drive the price back to the key lows of $1620.00. A break below these lows will open significant opportunities to see lower prices.
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