Gold is rising with expectations that the Fed will start cutting rates in September. Inflation has been falling steadily in the past few months. Powell acknowledged that they have gained moderate confidence that inflation is moving towards the 2% target. If today’s CPI follows last month’s data, upward pressure on gold might continue into the weekend. 

However, the news flow supporting the gold bulls might change really fast, and two main topics will be key for gold bears to follow. The first one is a possible ceasefire agreement between Hamas and Israel. The latest talk is that both sides are getting close to a deal, again. There is nothing solid so far, but if a deal is reached, it can significantly affect the bullion price. 

The second topic will be the US elections, more specifically Biden’s nomination. At the current trajectory, bets on Trump winning the election are rising. If some of the Democrats’ pressure on Biden to quit bears fruit, those odds will have to be recalculated by market participants, and this might give some breathing room for gold bears. If both topics happen within a few days, gold traders might even start talking about below $2300 once again. However, these are just possibilities, and if inflation retreats to 3% today, gold bulls might push for $2400. 

(XAUUSD Daily Chart) 

The Fibonacci retracement levels have been working perfectly for the last two months. Gold has been in an uptrend since late June and is now testing the 61.8% level at $2387. The momentum is strong so far, and the odds of a breakout do not seem to be low, but this possibly depends on today’s CPI data. If a breakout occurs, gold might run to the $2400-$2410 zone, and if the resistance cannot not hold the price there, the surge might even continue to the upper line of the range, near the previous top. 

Gold bears might try to use any upward breakout as a selling opportunity because gold has been ranging in a slightly positive sloped trend since April, and there has been no macroeconomic change that can alter this trend so far. Regarding today’s data, high inflation data is not expected, but if it occurs, it might create a huge surprise in the markets. The yellow uptrend line from late June might be key for any sharp selloff signal in the short term.