Gold forming a new uptrend

Gold traded in a narrow price range on Wednesday as investors looked forward to a key U.S. inflation reading. Consumer price index could shed more light on the Federal Reserve’s interest rates trajectory.

Fed Chair Jerome Powell in his testimony to the Senate said inflation had been improving in recent months. However, he did not provide specific signals about the possible timing of rate changes.

Traders currently see a 73% chance of a rate cut in September, according to the CME Group’s FedWatch Tool. Non-yielding bullions tend to become more attractive to investors when interest rates are lower.

The market's attention is now focused on the Consumer Price Index (CPI) data to be released on Thursday. Forecasts from the U.S. Bureau of Labor Statistics suggest headline inflation rising 0.1% over the month, and core inflation rising 0.2%. This would result in annualized gains of 3.1% and 3.4%, respectively.

In addition, according to the World Gold Council (WGC), global gold exchange-traded funds saw a second consecutive month of inflows in June. According to the WGC report, global holdings increased by 17.5 tonnes, valued at $1.4 billion last month. This was mainly due to the assets of funds listed in Europe and Asia.

From a technical point of view, gold prices are showing the emergence of a new uptrend on the H4 chart after exiting the uncertainty pattern. Bulls Power and Bears Power indicators (default readings) are within the positive zone, confirming the strength of bullish sentiment and the formation of the buying movement.

Signal:

Short-term prospects for GOLD suggest buying. 

The target is at the level of 2425.00.

Part of the profit should be taken near the level of 2390.00.

A stop-loss could be placed at the level of 2335.00.

The bullish trend is short-term, so trade volume should not exceed 2% of your balance.