Surprise after surprise for investors last weekend!
Following the surge in US inflation to the latest high, gold prices also 'jumped' again before last week's trade closed the curtain after showing a bearish pattern in previous trades.
The US annual inflation data (CPI) reading forecast to remain at 8.3% was published with the figure rising to 8.6% for May, the highest since December 1981, making gold prices soar around 500 pips until the end of last week's trading session.
Gold as an inflation -proof asset has soared following the release of the data as well as the US equity market experiencing a rebound and investors are now increasingly confident of expecting for the Federal Reserve (Fed) to tighten policy on concerns about such high inflation.
Examining the XAU/USD price chart which measured the value of gold against the US dollar last Friday, the price initially made a decline hitting the 1830.00 level before the market saw a drastic surge of the yellow metal until it reached back to the 1870.00 resistance zone.
Continuing with the opening of market trading earlier this week, the price movement did not continue its rise, instead making a decline of around 170 pips on the Asian session again moving back below the 1870.00 zone.
If the 1870.00 zone is still not successfully broken during the week, this will make the third consecutive week of the zone deterred from gold price hikes.
If gold continues to decline lower today, the price is seen to retest the zone around 1850.00 which was also one of the price focus zones before.
The continued decline beyond the zone will re -test the 1830.00 support level reached last Friday for investors to assess the price reaction in the RBS (resistance become support) zone.
However, if gold continues its bullish pattern after showing an energetic surge last week, passing the resistance zone at 1870.00 will record the latest 6 -week high for gold with the target heading towards the high zone at 1900.00.
If the rise is still successful and the price breaks the resistance zone, the target for a higher rise is at 1950.00 to continue to record the latest highs.
