Source: PaxForex Premium Analytics Portal, Fundamental Insight

With global inflation surging well above forecasts, central banks start to acknowledge that the situation may not be as tame as they initially thought. Ongoing supply system shocks after several Chinese ports went into lockdown mode following Covid-19 outbreaks of the Delta variant add to a global system already in distress. It adds to other sectors experiencing shortages and adds to inflationary pressures.

Central banks, especially the US Federal Reserve and the European Central Bank, continue to flood the financial system with inflation due to their obsessive money printing. Many point to the rise in inflation as transitory, related to last year's economic lockdowns, but the data is above the most pessimistic forecasts. A few economists acknowledge that inflation may persist, adding a bullish catalyst to gold and silver. Falling US treasury yields also force a reallocation of capital. 

The forecast for gold is turning bullish after a healthy correction that took this precious metal into its Ichimoku Kinko Hyo Cloud. While the Kijun-sen and the Tenkan-sen continue to decelerate, the velocity slows, and a sideways trend is likely to follow. Traders should exercise caution as short-term volatility may increase. The CCI already started to advance inside of extreme oversold territory. Can bulls capitalize on the improving technical picture and force gold into its horizontal resistance area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.

Should price action for GOLD/USD remain inside the or breakout above the 1,746.50 to 1,784.80 zone, PaxForex recommends the following trade set-up:

• Timeframe: D1           
• Recommendation: Long Position
• Entry Level: Long Position @ 1,770.00
• Take Profit Zone: 1,902.90 – 1,916.40
• Stop Loss Level: 1,735.80

Should price action for GOLD/USD breakdown below 1,746.50, PaxForex recommends the following trade set-up:

• Timeframe: D1           
• Recommendation: Short Position
• Entry Level: Short Position @ 1,735.80
• Take Profit Zone: 1,677.70 – 1,70.60
• Stop Loss Level: 1,746.50

Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.