Gold Price Forecast – Bulls Ignored Inflation Rise

Gold

Gold markets continued to remain bullish. Today, the gold prices were underway recovery as the week was approaching closing. Although the positive trend stays intact, signs of any immediate breakouts to the upside were missing. However, traders continued to add more long positions on the yellow metal prices, keeping in mind the effect of rising inflation and coronavirus outbreak.

Rising US Inflation

As per the US data released on Thursday, consumer prices have increased in January. Consumer data revealed that the consumers had spent more on accommodation and apparel, showcasing a 0.2% increase in the consumer price index in January. And, at the same time, a sudden jump in the unemployment claim figures was observed.

However, in the previous week, Fed Chief Powell had mentioned that the US economy is in a good place, suggesting to hold the rates in the short term. Powell added that “over the next few months, we expect inflation to move closer to 2%, as unusually low readings from early 2019 drop out of the 12-month calculation.”

Nonetheless, the gold markets appeared to stay reactionless to the inflation jump and continued to focus on the coronavirus updates.

Coronavirus Updates

This deadly outbreak continued to hold firm in the Chinese Hubei province, actively spreading throughout the country. Today, a senior Chinese health official addressed the media that, until date, around 1,716 health workers have been infected with coronavirus, killing six of them.

National Health Commission Vice Minister Zeng Yixin said, “At present, the duties of medical workers at the front are indeed extremely heavy; their working and resting circumstances are limited, the psychological pressures are great, and the risk of infection is high,”

Technical Analysis

1-Week Chart

Last week, the gold markets had closed, forming a bearish candle. And, this week, the gold bulls were displaying considerable endurance in order to push prices higher, recovering previous week losses. Anyhow, the gold prices couldn’t nudge much higher and remained more stabilized.

XAU/USD 1 Week 14 Feb. 2020
XAU/USD 1 Week 14 Feb. 2020

As I analyze the performance of the XAU/USD pair in reference to Gann fans, I see the prices have remained above 1:1 Gann line most of the time. That means, at present, the uptrend is well intact. However, any considerable bullish trigger would occur only if the prices move above the previous resistance – $1592.09 level.

1-Day Chart

The consolidation phase continued on the daily chart, ranging between $1546.07 and $1592.09 levels. However, there seem lesser hopes for a retest on the range bracket boundaries in the near term. Also, the volumes remain pretty moderate, hinting of consolidation continuation in the upcoming sessions.

XAU/USD 1 Day 14 Feb. 2020
XAU/USD 1 Day 14 Feb. 2020

Nevertheless, the Stochastic Oscillator remains fully loaded with higher momentum capacity, waiting for the bulls to initiate rigorous price actions.

4-Hour Chart

On the 4H chart, the bulls appeared to have made a recent attempt to break above $1577.62 level. However, the XAU/USD pair stood stubborn and continued to retest the aforementioned upside barrier.

XAU/USD 240 Min 14 Feb. 2020
XAU/USD 240 Min 14 Feb. 2020

Meanwhile, the Bollinger Bands were gradually broadening up, indicating the rise in the overall volatility of the pair. It seems as if the bulls would initiate an uptrend rally soon, heading towards $1592.09 handle.