After a strong rise in October, gold (XAU/USD) is now consolidating near recent highs as the market waits for key U.S. inflation data this week. Daily momentum has slowed, showing a sideways market, getting ready for the next strong move.
Technical View: Two Possible Scenarios
Base Case – Bullish Continuation
- Weekly Chart: Bollinger Bands are wide, and the higher high and higher low structure maintains the medium-term uptrend. Weekly RSI is at 71.9, close to overbought but not extreme.
Source: IUX
- Daily Chart: Gold is moving in a narrow range around $3,900–$4,160. The Bollinger Bands are tightening, showing a squeeze that could lead to a breakout. Daily RSI is around 59, leaving room to rise.
Source: IUX
- Scenario: If gold breaks and closes above $4,160 with strong volume, the uptrend could extend to $4,350–$4,370. Keeping the higher high and higher low structure on the daily chart would confirm the continuation of the uptrend.
Alt Case – Bearish Correction
- If gold is rejected at $4,160, profit-taking could trigger a technical pullback.
- On the daily chart, gold may fall to around $4,030 (Bollinger Bands MA) or even $3,900, the lower Bollinger Band.
- Note: $4,160 is the key level deciding between continuation and correction. The bearish scenario is invalid if gold closes above this level with strong volume.
Macro Focus: U.S. Inflation and Spending Data
While technical analysis points to scenarios around $4,160, macro factors, especially U.S. inflation and consumer spending data will guide gold’s next move. How gold reacts to CPI, PPI, and Retail Sales will either support or break the technical structure, clarifying the Base Case or Alt Case.
Thursday (Nov 13):
- Core CPI m/m: forecast 0.3% (previous 0.2%)
- CPI overall: forecast 0.2% (previous 0.3%)
- CPI y/y: forecast 3.0% (same as previous)
- Jobless claims
Friday (Nov 14):
- PPI, Retail Sales, Core Retail Sales: measuring consumer demand and producer price pressure
Source: metalsmine
Impact:
- If CPI/PPI and consumer indicators like Retail Sales and Core Retail Sales are strong, along with low jobless claims, expectations for “high rates for longer” will be reinforced, putting short-term pressure on gold.
- On the other hand, weaker-than-expected data could lead the Fed to pause tightening, supporting gold as a safe-haven asset.
Key Takeaways for Traders
Gold is consolidating on the daily chart, with the technical structure still leaning bullish. The $4,160 level is crucial:
- Break above $4,160: confirms bullish continuation (Base Case).
- Rejection at $4,160: gold enters a short-term correction (Alt Case).
The current strategy is to watch gold’s reaction around $4,160, combined with volume and RSI, to gauge trend strength and confirm a breakout or breakdown.
