Gold: $2.4K one more time

The inflation in the US was the major driver on financial markets during the previous week. As the inflation figure for June was better than market anticipated, it supported the market expectations that the Fed might cut interest rates as soon as September. Expectations pushed the USD to the lower grounds, bringing the price of gold to the highest weekly level at $2.422. Still the price reversed a bit on Friday, ending the week at the level of $2.411.

With the latest move to the upside, the RSI reached level of 63, however, clear overbought market side has not been reached. This leaves some additional space for the upside, when the clear overbought market side would indicate a potential for a short reversal. Moving average of 50 days is still modestly diverging from its MA200 counterpart, in which sense, a potential cross is not indicated for some time in the future.

The level of $2.400 has been a strong resistance line for gold since April this year. The level has been tested on several occasions, but never has been clearly breached. The potential for the upside still holds, however, in the week ahead, it should not be expected to make any significant move to the upside. The price of gold will continue to test 2.4K for the upside, at least till the level of $2.450. There is also some potential for the short reversal, where charts are indicating the level of $2.380.