The precious metal was subjected to strong selling pressure after the US labor market data showed an improvement that exceeded all expectations, which reinforced the market’s expectations about continuing to tighten monetary policy until mid-2023 instead of the end of the first quarter of this year.
And the statements of Jerome Powell, the US Federal Reserve Chairman, this week, came to reinforce expectations that the Fed will change its tone if the release scheduled for next Tuesday is higher than expected.
Powell stated that the Fed is ready to change the direction of monetary policy in order to control inflation, and that in the event that the upcoming economic data is not consistent with the Fed’s goals, it is ready to continue raising interest rates until it guarantees the direction of inflation rates towards the target set at 2% compared to the current 6.5%.
US inflation data is scheduled to be released on Tuesday, February 14th at 1:30 PM GMT. It is mentioned that the annual inflation recorded during the month of December, an increase of 6.5%, and according to the next reading, the direction of gold will be determined.
In the event that the data came in less than expected, the US dollar may give up its gains and return to the rise again.
But if the reading is higher than expected, the US dollar will continue to rise and gold will incur more losses.
From a technical point of view, gold is trading inside a bullish price channel on the short-term time frames, which supports buying from the lower border and taking profits at the upper border of the channel.
As for the medium term and the 4-hour time frame, if the level of 1865 is broken, the flag pattern will be confirmed, which will support the continuation of the decline to the next support level at $1835.
The following chart shows the impact of the latest inflation data on gold, which was released on January 12th.
