Gold Price News and Forecast: XAU/USD is trading just 0.22% higher on Tuesday despite some negative news
|Low inflation makes Powell a dove, how it affects gold?
Inflation remains low, while Powell signals dovish Fed for years. Good for gold.
The US CPI inflation rate declined 0.1 percent in May, following a 0.8 percent drop in April. The decrease was mainly driven by decreases in energy, transportation and apparel prices. The core CPI also declined 0.1 percent, following a 0.4 percent drop in April. It was the third consecutive monthly decline, which happened for the first time in history of the index that starts in 1957. Anyway, compared with the previous month, we see some stabilization of disinflation forces, at least on a monthly basis.
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Gold Price Analysis: $1744.75 is becoming an increasingly important resistance zone
There is a strong argument that gold should be trading much higher than where it is today. Considering the recent developments in the fundamental picture gold feels like it has been slow to react. On Tuesday there has been the news that Beijing has moved into lockdown again due to a second COVID-19 wave. India and China have been fighting at their border with India confirming 20 soldiers were killed. Lastly, the coronavirus cases in some of the main US states are rising again and Arizona posted a daily case rise of 6.5%.
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