GOLD Price fails to react after US inflation figures

U.S. consumer prices rose in November at the fastest pace in nearly 40 years. Prices rose 6.8% last month compared to November 2020, after +6.2% in October. This is the largest increase since 1982.

In last month, strong consumer demand continued to be hampered by supply problems related to the pandemic, with energy prices rising the most over the year (+33.3%).

After arguing that inflation was “temporary” and linked to the economic recovery from the historic 2020 recession caused by the Covid-19 pandemic, the Biden administration and the U.S. central bank finally admitted that inflation was more sustainable than expected.

The Fed will release new economic forecasts next week, including inflation. It is also expected to announce an acceleration of the reduction of its monetary assistance program to the economy in order to raise interest rates later this year in an effort to contain inflation.

At a congressional hearing last week, Jerome Powell acknowledged that he had underestimated the tenacity of the inflationary push. The financial institution now expects inflationary pressures to continue well into next year and then ease in the second half of 2022.

The gold price rises a little after the release of the inflation figures. In the medium term, the yellow metal still fails to recover. Finally, the market seems to be consolidating within a symmetrical triangle. It is therefore necessary to wait for a breakout of one of the two bounds to take advantage of the next directional move.

However, sellers continue to exert bearish pressure as long as prices are below the $1,800-1,790 area. A move below $1,750 would likely put gold under pressure and sellers could push it back towards $1,684.

On the other hand, the market will resume a bullish momentum if prices manage to regain the $1,850 level. A breach of this threshold would pave the way for a new wave of bullishness in order to reach $1,910 and then $1,960. In the short run, traders may look to target the $,1800 mark.

 (Chart Source: Tradingview 12.12.2021)

Support & Resistance Levels:

R3      1,877

R2      1,826

R1      1,800

S1      1,725

S2      1,684

S3      1,640

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