Gold investors were all smiles at yesterday's New York session trading as the price of the yellow metal soared to a 1-month high.
This is none other than the lack of United States (US) inflation data published yesterday.
The reading was somewhat surprising with inflation in June falling to 3.0%, lower than the forecast of 3.1%, from the previous month's level of 4.0%.
This is seen as adding support to the Federal Reserve (Fed) policymakers' statement that the cycle of monetary policy tightening is nearing its end.
The US dollar suffered a significant decline from the market's reaction to the data, while seeing the price of gold soar.
Looking at the price movement on the XAU/USD chart which measures the value of gold against the US dollar, the price initially dropped briefly in the European session to around 1934.00.
However, after the CPI data was published, prices surged past the important target level of 1950.00.
Momentum managed to be maintained until the end of the session, and the price managed to finish trading around the 1958.00 high.
The movement of gold prices was slow in the Asian session today (Wednesday), but showed a slight improvement at the beginning of the European session.
It is likely that the price will continue to move higher into the next session with the target of heading to the next concentration zone at 1980.00.
However, the risk towards the end of the week cannot be denied and the price of gold may fall again at the end of the week.
If the price pulls back below 1950.00, investors should watch out for further declines.
The 1930.00 zone will be the next target on the continued decline and clearer indications for a trend change will be observed.
