Gold price: key levels to watch with US inflation data in focus

Gold price is on a bearish pennant formation ahead of the US inflation data. Investors are eyeing the US CPI scheduled for release on Wednesday afternoon.

US inflation data

Inflation and employment are at the core of the ongoing taper talks. On Friday, the better-than-expected nonfarm payrolls numbers boosted the US dollar while pushing gold price below the crucial level of $1,800. Notably, Monday’s positive JOLTs job openings data further weighed on the precious metal.

With reference to the US CPI data, experts forecast a reading of 0.5% MoM, which is lower than the prior month’s 0.9%. With the exclusion of the volatile food and energy components, consumer prices are expected to have risen by 0.4% in July, down from 0.9% in June. Notably, higher-than-expected figures are likely to be a bearish catalyst for gold price.   

Gold price technical outlook

Gold price has formed a bearish pennant ahead of the US inflation data. A week ago, the precious metal plunged from an intraday high of 1,832.05 to a low of 1,677.68 on Monday. While it has since recorded a corrective rebound, the bears remain in control of the market. Notably, it has dropped by about 5.35% over a span of one week. At the time of writing, it was up by 0.28% at 1,734.13.

On a four-hour chart, it is trading below the 50 and 200-day exponential moving averages. In the near term, gold price is likely to continue finding support along 1,720 as investors are reluctant to make huge bets ahead of the US inflation data. Based on both the technicals and fundamentals, the bearish outlook still holds.

As a reaction to the data, the bears are likely to retest Monday’s low of 1,677.68. However, they will need to break the resistance at the psychological level of 1,700. On the flip side, lower-than-expected figures may push the prices to the resistance level of 1,750. Above that level, the next target will be along the 50-day EMA at 1,773.86. Nonetheless, for as long as the prices remain below the 200-day EMA at the crucial level of 1,800, the bearish sentiment will control the market.