Gold has remained steady after US inflation data came in lower than expected. Investors are taking defensive positions because of possible tariff issues, even though tariff deadlines may be delayed. With real yields decreasing due to potential easing by the Fed, gold is likely to trend upwards. However, if interest rates take a unexpectedly hawkish turn, we might see some short-term dips.

Technical Analysis

In the daily chart, gold bounced back from an important upward trendline. Buyers are aiming for a rally towards the 3438 resistance level, while sellers are looking for a break below the trendline to reach near 3120. The 4-hour chart shows minor resistance around 3377, with sellers expecting a dip below the main trendline and buyers targeting a rise to 3438. On the 1-hour chart, a minor upward trendline supports positive momentum. Buyers will likely defend this trendline in hopes of breaking through minor resistance, while sellers will aim to push prices below this line, looking for a major trendline breakout. Coming up are important events like Fed Chair Powell’s speech, US Jobless Claims, and the flash US PMIs, which could impact gold prices.

Recent Data and Strategies

The recent US Consumer Price Index data, which was lower than expected at 3.3% annually, signals cautious optimism. Derivative traders might consider buying call spreads to bet on price increases while limiting downside risk. Current market pricing indicates over a 65% chance of an interest rate cut by September, reinforcing this bullish outlook. Concerns about tariffs also support the view of gold’s potential rise. During the 2018-2019 trade disputes, gold increased over 20% amid rising global uncertainty, which sets a precedent for the current situation. Selling out-of-the-money put options may be a good way to collect premiums since these geopolitical issues should provide price support. From our viewpoint, the major upward trendline is crucial for any strategy. A bull put spread with the short strike below this trendline is a solid way to earn income while maintaining a bullish stance. If the price falls below that critical level, it signals us to exit bullish trades and consider buying puts to target a drop towards the 3120 support area. The upcoming remarks from Powell and the latest jobless claims could lead to short-term price fluctuations. With initial claims recently reaching a 10-month high, any evidence of further labor market weakness could push prices through the minor 3377 resistance. Traders might buy short-dated call options to take advantage of a possible breakout with minimal capital at risk. Create your live VT Markets account and start trading now.

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