This makes it more likely that the Fed will wait to make its next interest rate move. The higher rates typically cap the upside potential for gold. But high inflation also drives up the demand for hard assets. That should keep gold afloat as long as inflation is strong and geopolitical issues remain unsettled.
Silver (XAG) is showing strength as the price surged to $87. This indicates that the traders are still willing to purchase silver despite the uncertainty in the global markets. Silver can hold its ground as long as gold continues to support it and investors remain interested in precious metals due to inflation.
Gold Technical Analysis: Consolidation Builds Before Next Major Move
The daily chart for spot gold shows the price consolidating within $4,500 and $4,900 range. The spot gold price hit the 50-day SMA again before the inflation data announcement but failed to break higher on strong inflation data.
The price remains in the congestion zone and a break of any of these levels will likely trigger a strong move in the gold market. A break above $5,000 will trigger a strong surge in gold price. However, a break below $4,400 will indicate further downside towards the $4,000 area.
