Disappointing gold investors again today when they had to watch the value of the precious yellow metal shrink to a lower level.
However, this was actually expected and it is likely that investors were also prepared for this situation due to the impact of the publication of the United States (US) inflation data yesterday.
The slow decline in the US inflation rate has sparked expectations that the Federal Reserve (Fed) may have to maintain interest rate hikes for several more meetings.
Although annual inflation is declining, it is slow and still far from reaching the central bank's desired 2% target.
This has had the effect of strengthening the US dollar towards the end of the week although the price reaction was quite mixed when the data was published in the New York session yesterday.
If observed on the XAU/USD chart which measures the value of gold against the US dollar, the price increase occurred but only tested the resistance of 1870.00 before reversing direction again.
The decline has reached around 1843.00 before closing the New York session around 1853.00.
Resuming trading today (Wednesday), the price slowed down at that closing level and hovered below the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the XAU/USD chart with the signal still bearish.
More significant declines were exhibited in trades entering the European session this evening as prices headed towards the concentration level at 1830.00.
If the price fails to bounce after reaching that level, it is likely that the price will break through lower and then it will be seen to go to around 1800.00.
Towards the end of the week, it is not surprising if a surprise can happen, for example, the price of gold will jump again.
If the price rises, resistance at the 1870.00 level will be the focus to be retested.
And a rise back above the MA50 barrier will also be an early indication of the start of a bullish move for gold.
After passing the 1870.00 level, the price of gold is expected to climb back to around 1900.00.
