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Gold Eases Back to $1900, US Inflation Data Due

Gold slips to $1900 after $100 swing yesterday

Gold prices are edging lower after some wild swings in the previous session which saw the precious metal rise to $1975 before falling $100 lower.

Safe haven flows, as Russian invaded Ukraine sent the precious metal to its highest level in 17 months, before risk sentiment improved in the US session and sellers drove the price back down.

Gold trading remains choppy as Russia, Ukraine headlines continue to drive risk sentiment.

Looking ahead the Fed’s favorite inflation gauge is expected to rise to 5.1% YoY in January, up from 4.9%.

High inflation will add pressure to the Fed to act strongly to rein in the rising cost of living at next Fed meeting in mid-March.

The Fed are between a 25-basis point and 50 basis point rate hike. There is a chance that the conflict in Ukraine could dampen the prospects for a very aggressive Fed. However, if oil prices to stay over $100 per barrel, the Fed could be forced to act more aggressively anyway.

Where next for Gold?

On the 4-hour chart, Gold has been trending within a rising channel since early February. The price spiked high out of the rising channel yesterday to $1974 before falling to $1880 and then rising back into the channel.

Today the price is edging lower. The bearish crossover on the MACD is keeping sellers hopeful of further downside.

Sellers would need to take out $1892 in order to open the door to the weekly low of 1887. Yesterday’s low of 1880 is likely to act as a floor.

However, the 50 sma and the lower band to the rising channel have so far offered support at $1892 with buyers re-entering at that level pushing the price higher. The long lower wick on the candle suggests that there wasn’t much acceptance for gold at the lower prices.

Buyers could look for a move over 1915 to form a higher high.

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