If you were too busy keeping up with this week’s crypto drama, you should know that the U.S. just published its latest inflation numbers.
U.S. consumer prices rose by slowed down from 8.2% to an annual rate of 7.7% in October. Not only did this mark the fourth consecutive monthly slowdown, it also came below analysts estimate of an 8.0% uptick.
While the Fed will likely continue to raise its interest rates, Uncle Sam’s cooling inflation trends would also give the Fed members confidence to not be as aggressive with their tightening as in the previous months.
But now that holding the dollar won’t yield much more in the near future, other traders are setting their sights on holding non-yielding gold as a safe haven.
Spot gold (XAU/USD), which was knocking on the resistance of a Double Bottom pattern on the daily chart, busted above the pattern’s “neckline” just above $1,700.
Take note that a move above $1,700 also meant breaking above a descending trend line that had been solid since March this year.
XAU/USD is now trading above the daily time frame’s 100 SMA and it looks like it’s on its way to test the 200 SMA closer to the big $1,800 area.
Can the precious metal keep its bullish momentum against the dollar?
Stochastic is already flashing an “overbought” signal on the daily though yesterday’s candlestick is hinting of strong bullish pressure.
Unless we see profit-taking ahead of the weekend, or unless a market theme pops up to raise the demand for USD, then XAU/USD will likely hit the $1,800 mark before finding enough selling pressure.
What do you think?
Will XAU/USD find resistance at $1,800? Or are gold bulls just getting started?
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