Gold trading this week with a significant jump in price was exhibited in the New York session yesterday after the US dollar weakened significantly in reaction to the publication of the United States (US) inflation data.
The US consumer price index (CPI) posted an annual reading of 3.2% for October, down from the 3.7% level recorded in the previous month.
Gold price movements are observed through the XAU/USD chart which measures the value of gold against the US dollar.
Starting trading at the beginning of the week, the price was pushed down to touch the 1920.00 level before hovering slowly in the 1950.00 zone.
The price that started to move above the Moving Average 50 (MA50) support line on the 1-hour time frame on the chart gave an early signal for a trend change before the market then entered the New York session yesterday.
After the CPI data was published, prices continued to soar through the 1950.00 level until reaching a height of around 1970.00.
The price retreated back down to close the New York session trading around the 1962.00 level.
Slow price movements resumed trading in the Asian session this morning (Wednesday), but the pattern of price increases was shown until prices retested the heights reached yesterday.
Expectations for an extended price movement higher, the price will test the 1980.00 zone before the target will return to the critical 2000.00 zone.
If observed previously, the price tested the resistance zone at the end of October and in early November, but failed to break higher.
Meanwhile, for the expectation of a further decline in the price of gold, the 1950.00 zone is seen to give an interesting reaction before the direction of further movement will be identified.
If the price breaks down and also crosses the MA50 support line again, this will be a bearish signal and the price is likely to resume the downtrend of last week.
