Spot gold extends advance into the sixth straight day on Thursday and pressuring new 5-month high ($1868), posted on Wednesday when metal’s price spiked after higher than expected us inflation data in October.
Rising consumer prices boost demand for gold as an inflation hedge, while a slowdown in the US and Chinese economies contributes to the positive sentiment that could push the price much higher.
Bullseye significant barriers at $1872/75 (weekly cloud top/50% retracement of $2074/$1676, Aug 2020/July 2021 correction), violation of which would unmask psychological $1900 level and May’s peak at $1916.
Bullish studies on daily and weekly charts support the action, which could be interrupted for consolidation due to overbought conditions, with dip-buying favored above the former top at $1834.
However, traders need to remain cautious, as surging inflation may prompt an earlier than expected rate hike that would weigh on yellow metal’s price.
Res: 1868, 1875, 1890, 1900.
Sup: 1842, 1834, 1822, 1813.
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