Gold trading nearing the end of last week was seen to begin to level off after following the surge in prices that was affected by the economic data of the United States (US) published.
Giving the impression that the central bank's policy tightening cycle is coming to an end, the US inflation data that came out with declining numbers has had a significant weakening effect on the US dollar currency.
The US dollar, which suffered its biggest weekly drop last week for the year, has opened the way for gold to record a surge in prices to higher levels.
On the XAU/USD chart, which measures the value of gold against the US dollar, it has seen a price surge last week that has passed the 1950.00 level.
However, at the end of the week the price started to move horizontally with the highest level seen to have been reached around 1963.00.
Following the opening of trading earlier this week, the price has started to move below the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the XAU/USD chart suggesting a bearish pattern is about to begin.
Prices hovered slowly above the 1950.00 level until the start of the European session as investors awaited further indications for gold.
If the price manages to bounce off the 1950.00 level and break through the MA50 barrier, the price is likely to surpass last week's highs before making this week's latest highs.
The next target on the continued increase is in the 1980.00 zone before the price is targeted to go up to the 2000.00 level.
Meanwhile, if the price plunges below 1950.00, investors should prepare for a more severe drop in gold prices.
The potential downside is towards the important zone at 1940.00 before reaching last week's concentration level of 1920.00.
