Article by: ETO Markets
The US inflation report exceeded expectations. The US Consumer Price Index for December exceeded expectations by rising 3.4% YoY from the prior figure of 3.1%. Monthly growth in the headline CPI was 0.3% as opposed to 0.1% previously.
Later, the economic statistics from China will provide investors with additional insights. The country's Producer Price Index is predicted to decline 2.6% YoY from 3.0% in the previous reading, while the Consumer Price Index is expected to decline 0.4% YoY in December. Considering that China is one of the biggest purchasers of gold worldwide, the less-than-expected figures could be detrimental to the yellow metal.
Should the positive momentum continue, the 20-DMA at $… represents the immediate barrier. The price of gold is expected to reach its next optimistic target at last Friday's high of $…, above which a test of the $… barrier becomes possible.
The initial support, where the 50-DMA and Monday's low align, is at the $…confluence, should gold sellers regain control. If the latter is broken on a daily basis, the decline toward the $… threshold must resume.
