Gold price nears key resistance level after upbeat inflation numbers

It was a sea of green in the global equities market as investors downplayed recent worries on inflation. In Europe, the DAX, FTSE 100, and CAC 40 indices rose by more than 0.50%. Similarly, in the United States, futures tied to the Dow Jones, S&P 500, and Nasdaq 100 indices rose by 0.45%, 0.60%, and 1.10%. Technology stocks led the current recovery as investors rushed to buy the dips. The stocks had a volatile week as worries of inflation and high interest rates pushed bond yields higher. Some of the top stocks to watch in the American session will be Alibaba, AMC, and Tesla. Alibaba slumped in Hong Kong after the company reported its first loss as a public company. AMC shares surged yesterday after the firm raised millions to boost its balance sheet. Disney and Coinbase will be watched after they published mixed earnings.

The US dollar index retreated slightly after the US published better-than-expected retail sales numbers. According to the statistics agency, the headline retail sales was lower than the 10.7% it recorded in April. The sales rose by more than 50% on a year-on-year basis. Core sales declined by 0.8% after rising by 8.4% in the previous month. This decline was expected since March numbers were influenced by the $1.9 trillion stimulus package that included $1,400 stimulus checks. The currency may react mildly to the latest capacity utilization, industrial, and manufacturing production data that will come out later today.

The euro rose after the European Central Bank (ECB) published minutes of the last meeting. In the meeting, the bank decided to leave interest rates unchanged and to continue with its asset purchases. They also signaled that these policies would remain in place until inflation rises and the unemployment rate falls. The minutes came a few days after the European Commission boosted the overall outlook for the bloc’s economy. They expect that it will rise by 4.2% this year and by 3.8% in 2022. 

EUR/USD

The EUR/USD pair bounced back after the ECB minutes. The pair is trading at 1.2105, which is slightly above the overnight low of 1.2052. On the four-hour chart, the price has managed to move above the lower line of the rising wedge pattern. It has also risen above the 25-day moving average (MA) while the RSI has risen to 51. Therefore, the pair may keep rising as it tries to retest this week’s high of 1.2182. This outlook will be invalidated if the price drops below the 25-day EMA at 1.2099.

ETH/USD

The ETH/USD pair rose to an intraday high of 3,977, which is substantially higher than yesterday’s low of 3,500. The hourly chart shows that the pair has formed a widening channel that is shown in pink. It has also moved above the 25-day moving average. The pair also seems to be in the process of forming the right shoulder of the head and shoulders pattern. Therefore, the pair may form the right shoulder and resume the downward trend. Alternatively, it may keep rising as bulls target the year-to-date high of 4,356.

XAG/USD

The XAG/USD pair rose to an intraday high of 1,835, which is slightly below the weekly high of 1,845. The price is a few points below its all-time high of above 2,000. It has also moved above the short and longer-term moving averages. It has also formed a bullish flag pattern, which is usually a bullish signal. Therefore, the pair may keep rising as bulls attempt to move above 2,000.