Gold trading gave an interesting reaction in the New York session yesterday when the market was focused on the release of inflation data from the United States (US).
A reading of the US consumer price index showed a smaller-than-expected fall in March, pushing the US dollar lower.
The situation also had an impact on gold assets which also showed an increase in value but also a decrease.
If observed on the XAU/USD price chart which measures the value of gold against the US dollar, the price has surged to reach the level of 2028.00 as soon as the data was published.
However, the price dropped again towards the 2000.00 level in addition to testing the support level of the Moving Average 50 (MA50) on the 1-hour time frame on the XAU/USD chart.
Towards the end of the New York session, prices bounced back higher before closing trading around the 2014.00 level.
Continuing trading today (Thursday), after flatlining in the Asian session, prices continued to rise in the European session to challenge the high level reached yesterday.
Next, last week's high at 2030.00 is likely to be overcome with the expectation of gold still benefiting from the decline of the US dollar.
However if the situation changes, the price can plunge back to the 2000.00 concentration zone before a trend change signal will be observed.
Next, the price could drop to a lower level with the 1950.00 zone waiting to be tested which was also the focus before.
