Home > Gold price prediction amid rising US inflation

Gold price prediction amid rising US inflation

Gold price broke above $1,800 on renewed inflation fears. A bullish contracting triangle suggests more upside is possible in the period ahead. 

US inflation data for October was the highlight of the trading week and the event that triggered volatility in financial markets. Inflation keeps climbing in America, and because this is the largest economy in the world, it will export it to its main commercial partners too.

In other words, inflation will spread all over advanced economies, not used to such elevated levels. To exemplify, in October, the US inflation rose by 0.9% MoM, higher by more than 6% when compared to the same period last year.

The problem with inflation is that last time when it was so elevated, decades ago, the interest rates were much higher. Nowadays, the federal reserve funds rate is at its minimum level, with no prospects of the situation to change in the months to come. Naturally, people assume inflation will keep rising if the monetary policy is not changing.

As such, it is no wonder that traditional inflation hedges, such as gold, are in demand. The precious yellow metal surged over $100 in a few days, now trading comfortably above $1,850.

Gold bullish breakout points to more upside

The technical picture looks bullish for gold. The price broke higher after a contracting triangle ended and now the focus shifts to the highest point in the triangular formation. It is the minimum distance that the market should travel and it implies that $1,920 is in the cards in the period ahead.

Coupled with the fundamental arguments presented above, there is little in the way of the price of gold threatening to make new all-time highs. Truth be said, gold traded with a bearish tone all year so far, but the triangle that just ended suggests that this was merely a correction. According to the Elliott Waves Theory, the move from the all-time highs can be interpreted as a double combination, and the shape of the contracting triangle suggests that it will be fully retraced.

All in all, bulls will likely buy more on a daily close above $1,920. On the flip side, a move back below $1,760 invalidates the bullish scenario.

Trade/invest in stocks with just $50
Invest for dividends and get payout on stocks on Ex-Dividend day
Over 11 payment methods, including PayPal
Open my Account

We use cookies to personalise content & ads, provide social media features and offer you a better experience. By continuing to browse the site or clicking "OK, Thanks" you are consenting to the use of cookies on this website.