Technical Outlook for Gold Prices Ahead of U.S. Inflation Data !

How will inflation data impact gold price movements?

All eyes are on gold prices during today's trading, as significant volatility is expected with the release of U.S. inflation data. This is due to the negative correlation typically seen between the U.S. dollar and gold. However, it's important to note that this negative correlation is not always sustained. At times, both gold and the U.S. dollar can move in tandem, as both serve as safe havens for investors.
Regarding inflation data, markets are anticipating an increase in annual U.S. inflation from 2.7% to 2.9%. If realized, this would mark the highest reading in four months. On the other hand, core consumer price index (CPI) inflation is expected to remain steady at 3.3% year-on-year for the fourth consecutive month.
If inflation data comes in strong, this will likely strengthen the U.S. dollar and negatively impact gold prices in the short term. Furthermore, markets may anticipate that the Federal Reserve will refrain from cutting interest rates anytime soon, providing additional support for the dollar.

Technical Outlook for Gold Prices Ahead of U.S. Inflation Data

Gold is currently trading in a downtrend on the 4-hour timeframe, with the price declining and forming a lower low at $2662.645, signaling a shift from an upward to a downward trend. The recent rise in price appears to be a corrective movement, with $2689.290 acting as a reversal point to continue the downward trend toward the $2666.668 level.
The two key factors that could counter this bearish scenario as a weak U.S. inflation data, which would positively affect gold prices and from a technical breakout, where gold's price rises and closes a 4-hour candlestick above the $2697.825 level, according to the analyst’s perspective.